The Impact of Capital Market Imperfections on Investment-Cash Flow Sensitivity

2005 ◽  
Author(s):  
Senay Agca ◽  
Abon Mozumdar
Keyword(s):  
Cash Flow ◽  
Capital Market ◽  
Market Imperfections ◽  
Flow Sensitivity ◽  
Capital Market Imperfections ◽  
Cash Flow Sensitivity ◽  
The Impact

The impact of macroeconomic condition on investment-cash flow sensitivity of Indian firms

2019 ◽  
Vol 9 (1) ◽  
pp. 19-42
Author(s):  
Gaurav Gupta ◽  
Jitendra Mahakud
Keyword(s):  
Cash Flow ◽  
Economic Condition ◽  
Investment Decisions ◽  
Group Affiliation ◽  
Content Type ◽  
Flow Sensitivity ◽  
Macroeconomic Condition ◽  
Gdp Growth Rate ◽  
Cash Flow Sensitivity ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of the macroeconomic condition on investment-cash flow sensitivity (ICFS) of Indian firms and examine whether the effect of macroeconomic condition on ICFS depends on the size and group affiliation of the firm. Design/methodology/approach An empirical investigation is conducted using a dynamic panel data model or more specifically system generalized method of moments (GMM) estimation technique. Findings Empirical findings postulate that the availability of cash flow influences the investment decisions which depicts that Indian manufacturing firms are internally as well as externally financially constrained. This study finds that good economic condition (period of high GDP growth rate) reduces the ICFS, although this effect is stronger for small-sized and standalone firms than the large-sized and business group affiliated firms. The authors find that macroeconomic condition has a positive and significant effect on investment decisions. Research limitations/implications This study has considered only the non-financial sector. The future research could explore the effect of macroeconomic condition on ICFS might be affected by firm other characteristics such as firm age and firm capital structure. Social implications The government should provide loan on the low rate to the small-sized firms and standalone firms because it is very difficult for these firms to finance their investment during the bad economic condition (period of low high GDP growth rate). Originality/value This study contributes to the existing literature by analyzing the impact of the macroeconomic condition on ICFS as well as investment decisions of the Indian manufacturing firms, which is an unexplored issue from an emerging market perspective. To the best of my knowledge, this is a first-ever study which explores the effect of macroeconomic condition on investment decisions with respect to business group affiliation and firm size.

scholarly journals Ownership Structure and Cash Flows As Determinants of Corporate Dividend Policy in Pakistan

2010 ◽  
Vol 3 (3) ◽  
pp. 210 ◽  
Author(s):  
Talat Afza ◽  
Hammad Hassan Mirza
Keyword(s):  
Cash Flow ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Cash Flows ◽  
Least Square ◽  
Flow Sensitivity ◽  
Cash Flow Sensitivity ◽  
Operating Cash Flow ◽  
The Impact ◽  
Individual Ownership

Dividend Policy is among the widely addressed topics in modern financial literature. The inconclusiveness of the theories on importance of dividend in determining firm’s value has made it one of the most debatable topics for the researchers (see for example, Ramcharan, 2001; Frankfurter et. al 2002; Al-Malkawi, 2007). The present study investigates the impact of firm specific characteristics on corporate dividend behavior in emerging economy of Pakistan. Three years data (2005-2007) of 100 companies listed at Karachi Stock Exchange (KSE) has been analyzed using Ordinary Least Square (OLS) regression. The results show that managerial and individual ownership, cash flow sensitivity, size and leverage are negatively whereas, operating cash-flow and profitability are positively related to cash dividend. Managerial ownership, individual ownership, operating cash flow and size are the most significant determinants of dividend behavior whereas, leverage and cash flow sensitivity do not contribute significantly in determining the level of corporate dividend payment in the firms studied in our sample. Estimated results are robust to alternative proxy of dividend behavior i.e. dividend intensity.

Research on Excessive Investment with DEA Analysis for Chinese Listed Companies

2011 ◽  
Vol 225-226 ◽  
pp. 1208-1211 ◽  
Author(s):  
Jing Long ◽  
Yan Xi Li
Keyword(s):  
Cash Flow ◽  
Capital Market ◽  
Growth Function ◽  
Listed Companies ◽  
Flow Sensitivity ◽  
Chinese Listed Companies ◽  
Cash Flow Sensitivity ◽  
Dea Analysis ◽  
Dea Method ◽  
Q Values

This paper measured level of corporate over-investment with DEA method. In this paper, the empirical research tested the excessive levels of investment in listed companies. Studies have been shown by investment-cash flow sensitivity and growth function in metrics when excessive levels of investment in listed companies in China. Tobin Q values are not objective enough in China's capital market, while DEA method can be more scientific measure of Chinese listed companies for the level of over-investment.

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