Liquidity Constraints, Fundamentals and Investment: What Do We Learn From Panel Data?
type="main" xml:lang="en"> <title type="main">Abstract</title> <p>Liquidity constraints are an important determinant of investment in imperfect financial markets. Firm's investment is a function of marginal q, although liquidity constraints impose an upper bound on investment. Moreover, expectations over future liquidity conditions entail a financial accelerator effect on the firm's marginal q. Under regularity conditions there exists a relation between marginal and average q. However, these quantities are not equivalent in the presence of liquidity constraints, therefore econometric estimates using Tobin q as explanatory variable in the investment equation are subject to distortion. Econometric evidence from a dynamic panel of Italian firms in the period 1996–2010 supports these findings. </section>
Year of publication: |
2014
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Authors: | Tomat, Gian Maria |
Published in: |
Economic Notes. - Banca Monte dei Paschi di Siena SpA. - Vol. 43.2014, 3, p. 249-281
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Publisher: |
Banca Monte dei Paschi di Siena SpA |
Saved in:
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