companies. I test the joint hypothesis that 1) a decrease in cash/collateral decreases investment, holding fixed the … profitability of investment, and 2) the finance costs of different parts of the same corporation are interdependent. The results … support this joint hypothesis: oil companies significantly reduced their non-oil investment compared to the median industry …

research that uses cross-sectional differences in firm behavior to test for financing constraints on investment. This reply … of internal finance. Second, the KZ regression results (lower sensitivity of investment to cash flow for firms classified …

Most empirical models of investment rely on the assumption that firms are able to respond to prices set in centralized … determinant of investment spending, because of a "financing hierarchy," in which internal finance has important cost advantages … cost of capital, asset prices, or tax-based investment incentives. To the extent that firms are constrained in their …

We document how a plant-specific shock to investment opportunities at one plant of a firm ("treated plant") spills over … to other plants of the same firm--but only if the firm is financially constrained. While the shock triggers an increase … in investment and employment at the treated plant, this increase is offset by a decrease at other plants of the same …

, while the Q literature has used cash flow sensitivity analysis to test whether financing constraints hinder investment. This … banks continued to facilitate investment once non-bank financing options became available. Using the explicit bond issuing … criteria to solve the endogenous firm-sorting problem, I measure the investment-cash flow sensitivity of Japanese firms, and …

We develop a model of investment with financial constraints and use it to investigate the relation between investment … between q and investment, relative to the frictionless benchmark. We present a calibrated version of the model, which, due to … this effect, generates realistic correlations between investment, q, and cash flow …

Kaplan and Zingales [1997] provide both theoretical arguments and empirical evidence that investment-cash flow …

This paper investigates the sources of the correlation between corporate cash flow and investment by undertaking an in … investment-cash flow sensitivity. We find that in only 15% of firm-years is there some question as to a firm's ability to access … internal or external funds to increase investment. Strikingly, those firms that appear less financially constrained exhibit a …

measures of liquidity on the investment decisions of U. K. firms. These variables are introduced via an extension of the Q … model of investment which explicitly includes agency/financial distress costs. We discuss if the significance of cash flow …