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Institutional Determinants of Investment-Cash Flow Sensitivities in Transition Economies

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  • Klaus Gugler

    (University of Vienna, BWZ-Bruenner str. 72, Vienna A-1210, Austria)

  • Evgeni Peev

    (University of Vienna, BWZ-Bruenner str. 72, Vienna A-1210, Austria)

Abstract

We estimate investment-cash flow models for a large sample of firms in 13 transition economies over the period 1993–2003, and find that (1) investment-cash flow sensitivities decline over transition years; (2) for state-owned firms, in early transition the investment-cash flow sensitivity is negative, which we interpret as being consistent with soft budget constraints; (3) privatised firms invest efficiently; and (4) foreign-controlled firms are less financially constrained than other firms.

Suggested Citation

  • Klaus Gugler & Evgeni Peev, 2010. "Institutional Determinants of Investment-Cash Flow Sensitivities in Transition Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(1), pages 62-81, March.
  • Handle: RePEc:pal:compes:v:52:y:2010:i:1:p:62-81
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    Cited by:

    1. Gugler, Klaus & Peev, Evgeni & Segalla, Esther, 2013. "The internal workings of internal capital markets: Cross-country evidence," Journal of Corporate Finance, Elsevier, vol. 20(C), pages 59-73.
    2. Carsten Sprenger & Olga Lazareva, 2017. "Corporate Governance and Investment: Evidence from Russian Unlisted Firms," HSE Working papers WP BRP 160/EC/2017, National Research University Higher School of Economics.
    3. Tsapin Andriy & Tsapin Oleksandr, 2014. "Corporate Investment and Financial Crisis: Can Under- and Overinvestment Be Mitigated by Banks in an Emerging Market?," EERC Working Paper Series 14/04e, EERC Research Network, Russia and CIS.

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