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Investment-cash flow sensitivity: a macroeconomic approach

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  • Moncef Guizani

Abstract

The purpose of this paper is to examine whether the investment-cash flow sensitivities vary with macroeconomic applying data from a sample of 84 non-financial firms listed on Saudi stock market. The results show that the ICF sensitivity is positive, and is a lot larger for more constrained firms. The evidence also shows that contractionary monetary policy, poor financial development and liquidity crisis strengthen the dependence of firms on internally generated funds when undertaking new investment projects. Taken together, the financial development effect becomes insignificant suggesting that this effect may be caused by either the monetary policy or the financial crisis.

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  • Moncef Guizani, 2020. "Investment-cash flow sensitivity: a macroeconomic approach," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 13(2), pages 115-139, May.
    • Handle: RePEc:taf:macfem:v:13:y:2020:i:2:p:115-139
    DOI: 10.1080/17520843.2020.1717570
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    Cited by:

    1. Sahoo, Pravakar & Bishnoi, Ashwani, 2023. "Drivers of corporate investment in India: The role of firm-specific factors and macroeconomic policy," Economic Modelling, Elsevier, vol. 125(C).

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