2006
DOI: 10.1007/s11187-006-0006-y
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Firm Growth and Liquidity Constraints: A Dynamic Analysis

Abstract: Using a large unbalanced panel data set of Portuguese manufacturing firms surviving over the period from 1990 to 2001, the purpose of this paper is to examine whether liquidity constraints faced by business firms affect firm growth. We use a GMM-system to estimate a dynamic panel data model of firm growth tha t incorporates cash flow as a measure of liquidity constraints and persistence of growth. The model is estimated for all size classes, including micro firms. Our findings suggest that smaller and younger … Show more

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Cited by 244 publications
(191 citation statements)
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“…Many of these researchers also confirm an association between these challenges and employment. The association between firm liquidity constraints and investment, growth and employment has been highlighted by previous research (Acemoglu, 2001;Oliveira & Fortunato, 2006).…”
Section: Theoretical Frameworkmentioning
confidence: 74%
See 4 more Smart Citations
“…Many of these researchers also confirm an association between these challenges and employment. The association between firm liquidity constraints and investment, growth and employment has been highlighted by previous research (Acemoglu, 2001;Oliveira & Fortunato, 2006).…”
Section: Theoretical Frameworkmentioning
confidence: 74%
“…However, market imperfections in terms of asymmetric information problems, moral hazards, agency conflicts between shareholders and managers, labour market regulations, and distortionary taxation, lead to the separation of investment and financing decisions. Small firms are shown to suffer more from the problems related to market imperfections and, in particular, liquidity constraints than larger firms (Myers, 1984;Myers & Majluf, 1984;Oliveira & Fortunato, 2006). Thus, liquidity constraints are even more important for more vulnerable firms, that is, small businesses at start-up (Myers, 1984;Myers & Majluf, 1984).…”
Section: Theoretical Frameworkmentioning
confidence: 99%
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