Investment-cash flow sensitivity and financial constraints: Evidence from unquoted European SMEs

Mulier, Klaas; Schoors, Koen; Merlevede, Bruno

doi:10.1016/j.jbankfin.2016.09.002

Cited by 101 publications

(79 citation statements)

References 46 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The variable employee costs is based on the assumption that firms will increase their workforce if they expect good investment opportunities (Mulier et al 2016). Our findings indicate that firms' investment is positively related to employment growth.…”

Section: Resultsmentioning

confidence: 79%

“…We have found a negative sign for lagged investment. Mulier at al. (2016) observed that the sign of lagged investment term varies among countries.…”

Section: Resultsmentioning

confidence: 99%

“…Their results indicate that investments positively depend on cash flow and confirmed the existence of the balance sheet channel because of the effect on the net worth of firms and their consequent decisions. Mulier et al (2016) studied investment-cash flow sensitivity and financial constraints for European unquoted small and medium enterprises between 1996 and 2008. They constructed their own index of financial constraints, but because of shortcomings provided in the paper, they would like to conduct future research into the topic.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Following Mulier et al (2016), we included the cost of employees in our explanatory variables set. It is connected to firm-level employment.…”

Section: Data Characteristics and Specificationmentioning

confidence: 99%

“…The positive relation is expected as it is assumed that firms expand the workforce when they expect good investment opportunities which are linked to a higher cost of employees. Mulier et al (2016) are also followed when focusing on the influence of investment in the previous period. However, the impact is unclear; it can be positive or negative.…”

Section: Data Characteristics and Specificationmentioning

confidence: 99%

See 4 more Smart Citations

Loose Monetary Policy and Corporate Investment of Manufacturing Firms in the Czech Republic

Kajurová

Linnertová

2018

Review of Economic Perspectives

View full text Add to dashboard Cite

The aim of the paper is to evaluate the effects of loose monetary policy on corporate investment of manufacturing firms in the Czech Republic during the period between 2006 and 2015. The main focus of the paper is on the effect of low interest rates on investment activity of Czech firms; additionally, the effects of interactions between interest rate and other firm-specific variables are investigated. The results indicate that corporate investment is positively associated with firm size, investment opportunities, and long term debt. Also, a negative effect of the cash position is found. Further, the findings show that monetary policy is a significant determinant of firm investment activity: when the monetary policy is loose, investment is positively affected. Furthermore, differences in the determinants of investment between highly and low leveraged firms were revealed. 3 The development of discount rates of both the CNB and ECB is shown in Appendix 1.

show abstract

Section: Resultsmentioning

confidence: 79%

“…We have found a negative sign for lagged investment. Mulier at al. (2016) observed that the sign of lagged investment term varies among countries.…”

Section: Resultsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

“…Following Mulier et al (2016), we included the cost of employees in our explanatory variables set. It is connected to firm-level employment.…”

Section: Data Characteristics and Specificationmentioning

confidence: 99%

Section: Data Characteristics and Specificationmentioning

confidence: 99%

See 3 more Smart Citations

Loose Monetary Policy and Corporate Investment of Manufacturing Firms in the Czech Republic

Kajurová

Linnertová

2018

Review of Economic Perspectives

View full text Add to dashboard Cite

show abstract

Managerial entrenchment, financial constraints, and investment choice in unlisted firms

Ranasinghe

2019

Int. J Fin Econ

View full text Add to dashboard Cite

This paper examines how internally generated cash is allocated for investment in unlisted firms in the post‐global financial crisis period. We estimate models using a panel data set from unlisted firms in the United Kingdom from 2009 to 2014. With the use of a commercially available credit rating and a widely used index in the literature to proxy for external financial constraints, the paper concludes that less financially constrained firms display a higher investment‐cash flow sensitivity. This association has been consistent across the post‐global financial crisis period. We find some evidence to suggest that investment inefficiencies reduce investment‐cash flow sensitivity, and this is intensified in the presence of external financial constraints. We extend the investment choice literature in the presence of financial constraints using evidence from unlisted firms. We also enhance the investment choice literature by incorporating the managerial entrenchment effect along with financial constraints. Provision of financial support for private entities is a crucial policy focus for any government. We call for policymakers to enhance microfinancing options for unlisted firms to reduce the impact from external financial frictions.

show abstract

Do family firms perform better under financial constraints? Financial constraints, family firms and performance

Patel

Guedes

2021

Manage Decis Econ

View full text Add to dashboard Cite

We investigate whether financial constraints impair the performance of SMEs and possibly lead to firm failure. More importantly, we address the question of whether family SMEs fare better in terms of performance and survival when operating under financial constraints. We draw on data covering 2,475,210 firm-year observations from 458,025 firms and use a recently developed financial constraint measure, ASCL (age, size, cash flow and leverage). We find that financial constraints decrease performance and increase the hazard of failure. However, family firms improve their performance and lower the hazard of failure under increasing financial constraints.These findings have implications for understanding the worth of family firms in improving performance under financial constraints.

show abstract

Investment-cash flow sensitivity and financial constraints: Evidence from unquoted European SMEs

Cited by 101 publications

References 46 publications

Loose Monetary Policy and Corporate Investment of Manufacturing Firms in the Czech Republic

Loose Monetary Policy and Corporate Investment of Manufacturing Firms in the Czech Republic

Managerial entrenchment, financial constraints, and investment choice in unlisted firms

Do family firms perform better under financial constraints? Financial constraints, family firms and performance

Contact Info

Product

Resources

About