monetary and other shocks. The theory predicts a positive effect of cash flow on investment, given fundamental determinants of …This paper tests the balance sheet theory, where the status of balance sheets affects the economy's response to … investment. I use an empirical method developed by Gilchrist and Himmelberg (1995, 1999), which has previously only been used to …

In this paper we describe a theoretical model of optimal investment of various types of financially constrained firms …. We show that the resulting relationship between internal funds and investment is non-monotonic. In particular, the … magnitude of the cash flow sensitivity of the investment is lower for firms with credit rationing compared to firms that are …

level investment sensitivity to cash flow is used to identify financing constraints. We find that the sensitivities are … importantly, the cash flow sensitivity of investment is lower in countries with better-developed financial markets. This suggests …

understanding of Belgian firms' investment behavior. Two main and interrelated topics are investigated: the link between financial … structure and investment decision, on the one hand, the effect of uncertainty on the level of investment, on the other hand … are more sensitive to interest rate and cash flow. However, no role for investment price volatility is observed. …

Previous studies argued that low investment-cash flow sensitivities of German firms may be caused by dominance of … panel data approach show that the dependence of investment spending on internal funds does not significantly differ between …

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. …

French data suggest that (i) increased functional distance induces an increase of the investment cash flow sensitivity … constraints is non linear with an investment-cash flow relationship supposed to be increasing for low levels of operational …

This paper surveys issues with respect to the structural modelling of econometric tests of investment facing financial … ground much more the interpretation of the sensitivity of investment to liquidity variables such as cash flow as a measure of … financial constraints. The structural modelling of investment facing financial constraints is also limited by the structural …

In this contribution, we present a novel instrument to control for investment opportunities in studying the investment … investment, especially when focussing on the corporate governance aspects of the investment-cash-flow sensitivity. On the other … hand, it implies the investment-cash-flow sensitivity can only be studied in high-tech environments. These have corporate …