Investment and access to external finance in Europe: Does analyst coverage matter?

Does Green Finance Support to Reduce the Investment Sensitivity of Environmental Firms?

“…In high-ESFs, Tobin's Q (0.043), and CF (0.421) develop a significant positive correlation with Investment-I (Brusov et al, 2012). It guides that high-ESFs firm, internal cash flows and financing-cash flows sensitivity are highly correlated with long-term investment-I (Galanti et al, 2022). The significant positive correlation between GF and I (0.354) indicates that the firm funds the projects with green finance and also influences the managers to design the long-term investment policy (Devika & Shankar, 2022).…”

“…Regression analysis of integration of green finance with firm financing-cash flows p-values 5% and (Beta = β 0.037; p-values 5%) transmit more volatility on investment than the lower-ESFs (Beta = β 0.026; p-values 5% and (Beta = β 0.024; p-values 5%). It indicates that firms that are more sensitive to investment have greater systematic risk and transmit higher volatility into firm investment (Galanti et al, 2022).…”

“…Tang and Zhang (2020) find that green finance firms have better governance structures, more cautious about the environment, and implement sustainable investment policies for all stakeholders. Galanti et al (2022) report that the integration of green finance with firm financing decisions is positively related to their investment decisions, which have been explained as an interpretation of firm access to the capital market. We argue that prior literature by Hovakimian and Hovakimian (2009), Mohamed et al (2014), and Lin et al (2021) focus only on the single equation models, by examining exclusively on the investment cash flow sensitivity, but neglecting the green finance cash flow sensitivity that reduces the firm cash flow volatility into the investment decisions.…”

Do State Ownership and Political Connections Affect Precautionary Cash Holdings for Customer Concentration? Evidence from China

“…Bowen et al (2008) indicate that analyst coverage lowers seasoned equity offerings' under-pricing. Specifically, evidence from Europe shows that analyst coverage helps improve firms' financial conditions (Galanti et al, 2022). In addition, Cheng and Subramanyam (2008) provide evidence that analyst coverage reduces the default risk.…”

“…Since political connections mitigate the precautionary motivation of cash holdings by creating more sources of financing (Claessens et al ., 2008; Houston et al ., 2014; Infante and Piazza, 2014; Khwaja and Mian, 2005), their effects should be more pronounced for firms with limited access to finance. Prior literature shows that firms with high analyst following have stronger financing ability (Cao et al ., 2020; Chang et al ., 2006; Doukas et al ., 2008; Galanti et al, 2022). In addition, institutional ownership decreases the cost of financing (Elyasiani et al ., 2010; Roberts and Yuan, 2010; Saci and Jasimuddin, 2021).…”