Investment, Finacial Factors and Cash Flow: Evidence From UK Panel Data
In this paper we provide some econometric evidence on the impact of
financial factors like cash flow, debt and stock 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 may be due to the fact that it proxies for output or because it is a
better measure of market fundamentals than Q. Moreover we investigate if
the effect of financial factors varies across different types of firms,
according to size, age, and type of industry (growing and declining). We
analise the determinants of the magnitude of the cash flow effect and
explain why caution must be exercised in attributing inter-firm differences
only to differences in the importance of agency or financial distress costs.
In order to set up a list of libraries that you have access to,
you must first login
or sign up.
Then set up a personal list of libraries from your profile page by
clicking on your user name at the top right of any screen.