The Sensitivity of Investment to Cash Flow : An Explanation Based on the Growth-Type-Aligned Financing Hierarchy
Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (no ISBN/ISSN) › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
| Original language | English |
|---|---|
| Number of pages | 53 |
| Publication status | Published - 15 Dec 2016 |
Conference
| Title | 29th Australasian Finance and Banking Conference |
|---|---|
| Location | Shangri-La Hotel Sydney |
| Place | Australia |
| City | Sydney |
| Period | 14 - 16 December 2016 |
Link(s)
| Document Link | Links |
|---|---|
| Permanent Link | https://scholars.cityu.edu.hk/en/publications/publication(bda07a02-c89a-4cf0-89c3-4dedee5366b1).html |
Abstract
We find the investment-cash-flow-sensitivity (ICFS) decreases with a firm’s asymmetric informational imperfection about growth (AI), a variable highly persistent over time. Firms with distinctly initial AI have distinct future investment styles and financing patterns. Higher initial AI predicts an investment style with more R&D intensity and a financing pattern with more equity than debt. Types of asymmetric information (about growth vs. assets-in-place) affect external finance so that growth uncertainty appears to facilitate rather than suppress equity financing. These findings are consistent with a growth-type explanation for ICFS and do not support the proposition that informational imperfection generally imposes financial constraints.
Bibliographic Note
Information for this record is supplemented by the author(s) concerned.
Citation Format(s)
The Sensitivity of Investment to Cash Flow : An Explanation Based on the Growth-Type-Aligned Financing Hierarchy. / WU, Xueping; Au Yeung, Chau Kin.
2016. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia.Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (no ISBN/ISSN) › peer-review
