Measuring firms’ financial constraints: Evidence for Portugal through different approaches
Today's shortage of financial resources calls for the attention of researchers to the problem of financial constraints faced by firms. In this paper we analyse firms' financial constraints by estimating both investment-cash flow sensitivities and cash-cash flow sensitivities upon a large unbalanced panel of Portuguese firms in order to obtain robust findings. Additionally, we classify firms according to characteristics that are generally believed to indicate the presence of constraints (size, age and dividend payment). Our results clearly show that Portuguese firms are, in general, financially constrained. Furthermore, we verify that such constraints are more severe for certain groups of firms, in particular those firms that are smaller and do not pay dividends. However, we do not find evidence that age as a good proxy for financial constraints. Finally, we cast some doubts on the direct implementation of the SA index as a measure of financial constraints.
|Date of creation:||Jul 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Av. Dias da Silva, 165, 3004-512 COIMBRA|
Phone: + 351 239 790 500
Fax: +351 239 403511
Web page: http://www.uc.pt/en/feuc/gemf/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steven M. Fazzari & R. Glenn Hubbard & BRUCE C. PETERSEN, 1988.
"Financing Constraints and Corporate Investment,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
- Coad, Alex, 2010.
"Investigating the exponential age distribution of firms,"
Economics Discussion Papers
2010-12, Kiel Institute for the World Economy (IfW).
- Coad, Alex, 2010. "Investigating the exponential age distribution of firms," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-30.
- Alex Coad, 2009. "Investigating the exponential age distribution of firms," Papers on Economics and Evolution 2009-23, Philipps University Marburg, Department of Geography.
- Cabral, Luís M B & Mata, José, 2001.
"On the Evolution of the Firm Size Distribution: Facts and Theory,"
CEPR Discussion Papers
3045, C.E.P.R. Discussion Papers.
- Luís M B Cabral & José Mata, 2003. "On the Evolution of the Firm Size Distribution: Facts and Theory," American Economic Review, American Economic Association, vol. 93(4), pages 1075-1090, September.
- Michael T. Hannan, 2005. "Ecologies of Organizations: Diversity and Identity," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 51-70, Winter.
- Patrick Musso & Stefano Schiavo, 2008.
"The impact of financial constraints on firm survival and growth,"
Journal of Evolutionary Economics,
Springer, vol. 18(2), pages 135-149, April.
- Patrick Musso & Stefano Schiavo, 2007. "The Impact of Financial Constaints on Firm Survival and Growth," Documents de Travail de l'OFCE 2007-37, Observatoire Francais des Conjonctures Economiques (OFCE).
- Patrick Musso & Stefano Schiavo, 2007. "The Impact of Financial Constraints on Firms Survival and Growth," Working Papers hal-00973115, HAL.
- Patrick Musso & Stefano Schiavo, 2008. "The Impact of Financial Constraints on Firm Survival and Growth," Post-Print halshs-00721058, HAL.
- Patrick Musso & Stefano Schiavo, 2007. "The Impact of Financial Constraints on Firms Survival and Growth," Sciences Po publications 2007-37, Sciences Po.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Fumio Hayashi, 1981.
"Tobin's Marginal q and Average a : A Neoclassical Interpretation,"
457, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-24, January.
- Owen Lamont & Christopher Polk & Jesus Saa-Requejo, .
"Financial Constraints and Stock Returns.","
CRSP working papers
451, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Flora Bellone & Patrick Musso & Lionel Nesta & Michel Quere, 2010.
"Market Selection Along the Firm Life Cycle,"
in: Innovation, Economic Growth and the Firm, chapter 5
Edward Elgar Publishing.
- Yi-Chen Lin, 2007. "The cash flow sensitivity of cash: evidence from Taiwan," Applied Financial Economics, Taylor & Francis Journals, vol. 17(12), pages 1013-1024.
- Acharya, Viral V & Almeida, Heitor & Campello, Murillo, 2005.
"Is Cash Negative Debt? A Hedging Perspective on Corporate Financial Policies,"
CEPR Discussion Papers
4886, C.E.P.R. Discussion Papers.
- Acharya, Viral V. & Almeida, Heitor & Campello, Murillo, 2007. "Is cash negative debt? A hedging perspective on corporate financial policies," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 515-554, October.
- Viral V. Acharya & Heitor Almeida & Murillo Campello, 2005. "Is Cash Negative Debt? A Hedging Perspective on Corporate Financial Policies," NBER Working Papers 11391, National Bureau of Economic Research, Inc.
- Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
- David Roodman, 2006.
"How to Do xtabond2: An Introduction to "Difference" and "System" GMM in Stata,"
103, Center for Global Development.
- David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
- Aydogan Alti, 2003. "How Sensitive Is Investment to Cash Flow When Financing Is Frictionless?," Journal of Finance, American Finance Association, vol. 58(2), pages 707-722, 04.
- Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Stephen Bond & Julie Ann Elston & Jacques Mairesse & Benoît Mulkay, 2003. "Financial Factors and Investment in Belgium, France, Germany, and the United Kingdom: A Comparison Using Company Panel Data," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 153-165, February.
- Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
- Manuel Arellano & Stephen Bond, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Heitor Almeida & Murillo Campello & Michael S. Weisbach, 2004. "The Cash Flow Sensitivity of Cash," Journal of Finance, American Finance Association, vol. 59(4), pages 1777-1804, 08.
- Luís Cabral, 2007. "Small firms in Portugal: a selective survey of stylized facts, economic analysis, and policy implications," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(1), pages 65-88, April.
- repec:adr:anecst:y:1998:i:49-50:p:16 is not listed on IDEAS
- Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 169-215.
- Blandina Oliveira & Adelino Fortunato, 2005.
"Firm Growth and Liquidity Constraints: A Dynamic Analysis,"
GEMF Working Papers
2005-07, GEMF - Faculdade de Economia, Universidade de Coimbra.
- Blandina Oliveira & Adelino Fortunato, 2006. "Firm Growth and Liquidity Constraints: A Dynamic Analysis," Small Business Economics, Springer, vol. 27(2), pages 139-156, October.
When requesting a correction, please mention this item's handle: RePEc:gmf:wpaper:2010-15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sara Santos)
If references are entirely missing, you can add them using this form.