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.
| Original language | English |
|---|---|
| Number of pages | 53 |
| Publication status | Published - 15 Dec 2016 |
| Event | 29th Australasian Finance and Banking Conference - Shangri-La Hotel Sydney, Sydney, Australia Duration: 14 Dec 2016 → 16 Dec 2016 https://www.business.unsw.edu.au/about/schools/banking-finance/seminars-conferences/australasian-finance-banking-conference/past-conferences/29th-australasian-finance-and-banking-conference |
Conference
| Conference | 29th Australasian Finance and Banking Conference |
|---|---|
| Abbreviated title | 2016 AFBC |
| Place | Australia |
| City | Sydney |
| Period | 14/12/16 → 16/12/16 |
| Internet address |
Bibliographical note
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