The Sensitivity of Investment to Cash Flow: An Explanation Based on the Growth-Type-Aligned Financing Hierarchy

Xueping WU; Chau Kin Au Yeung

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 (without host publication) › peer-review

Overview

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Author(s)

Xueping WU
Chau Kin Au Yeung

Related Research Unit(s)

Department of Economics and Finance

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)

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Document Link	Links https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2825036 Other version
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)

[ RIS ] [ BibTeX ]

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 (without host publication) › peer-review

WU, X & Au Yeung, CK 2016, 'The Sensitivity of Investment to Cash Flow: An Explanation Based on the Growth-Type-Aligned Financing Hierarchy', Paper presented at 29th Australasian Finance and Banking Conference, Sydney, Australia, 14/12/16 - 16/12/16. <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2825036>

WU, X., & Au Yeung, C. K. (2016). The Sensitivity of Investment to Cash Flow: An Explanation Based on the Growth-Type-Aligned Financing Hierarchy. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2825036

WU X, Au Yeung CK. The Sensitivity of Investment to Cash Flow: An Explanation Based on the Growth-Type-Aligned Financing Hierarchy. 2016. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia.

WU, Xueping ; Au Yeung, Chau Kin. / The Sensitivity of Investment to Cash Flow : An Explanation Based on the Growth-Type-Aligned Financing Hierarchy. Paper presented at 29th Australasian Finance and Banking Conference, Sydney, New South Wales, Australia.53 p.