Investment Financing of Organizational Capital
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 343-379 |
| Journal / Publication | Asia-Pacific Journal of Financial Studies |
| Volume | 45 |
| Issue number | 3 |
| Publication status | Published - Jun 2016 |
Link(s)
Abstract
We identify that the cost of external capital and the frontier technology (FT) shock level are two important factors affecting external capital supply. We explore how they interact to affect the investment financing of organizational capital (OC). We show that the FT shock level has experienced a dramatic change from being counter-cyclical before 1991 to pro-cyclical after 1991. This structural break alters the OC investment sensitivities during the two sub-periods. We find that the OC investment-cash flow sensitivity is low and the OC investment-q sensitivity is high only when the cost of external capital is low and the FT shock level is simultaneously high. These patterns are mainly driven by financially constrained firms. In addition, our empirical findings suggest that OC investments made during recessions when the FT shock level is also low generate higher productivity than in other conditions.
Research Area(s)
- Business cycle, Financial constraints, Frontier technology, Investment-cash flow sensitivity, Investment-q sensitivity, Organizational capital
Citation Format(s)
Investment Financing of Organizational Capital. / Jiang, Daniel X.; Luo, Miao; Cai, Jun.
In: Asia-Pacific Journal of Financial Studies, Vol. 45, No. 3, 06.2016, p. 343-379.
In: Asia-Pacific Journal of Financial Studies, Vol. 45, No. 3, 06.2016, p. 343-379.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
