The impact of financial variables on firms’ real decisions: Evidence from Spanish firm-level data

Abstract

This paper analyses the impact of alternative measures of …rms' …nancial health on their investment and employment decisions. Using disaggregated data, we …nd that corporate …nancial position a¤ects business activity and this impact is more intense when …nancial pressure exceeds a certain threshold. Composite indicators that summarize this non-linear impact suggest that specially in episodes where the …nancial pressure on a signi…cant number of …rms reaches levels at which it has a pronounced in ‡uence on real activity, indicators based on aggregate data may not reliably re ‡ect the system's …nan-cial soundness since they do not adequately re ‡ect the vulnerability of the most fragile companies.JEL Codes: C33, E22, G32, J23.

The Impact of Financial Position on Investment: An Analysis for Non-Financial Corporations in the Euro Area

“…Table 2 shows the results obtained for the baseline speci…cation (that is, before including …nancial variables). As can be seen, the results are in line with those found in similar studies (see amongst others Bond et al (2003) or Hernando and Martinez-Carrascal (2008)): the errorcorrection term (k y) it 2 is correctly signed and statistically signi…cant and the sales growth (either contemporaneous or lagged) has a positive short-run impact on investment, which is statistically signi…cant at conventional signi…cance levels in almost all cases. 6 Also in line with these studies, lagged investment rate is found to be insigni…cant in all the countries except France.…”

“…This simple descriptive analysis also indicates that in some countries (especially Belgium, the Netherlands and Spain, and somewhat less clearly, Italy) the relationship between …nancial pressure and investment might be non-linear, as no marked di¤erences in investment rates are observed between those …rms with the lowest …nancial pressure and those with average …nancial pressure, while …rms facing a high degree of …nancial pressure show substantially lower investment rates. This hypothesis has already been tested in Hernando and Martinez-Carrascal (2008) indebtedness and investment rates is analysed. The absence of a clear link in this case might be the result of two opposite e¤ects: on the one hand, highly indebted …rms may experience problems in gaining access to additional external funds to …nance their projects; on the other hand, companies with higher investment levels might be those that have been more successful in attracting external funds to …nance their growth opportunities.…”

Financing Obstacles and Growth: An Analysis for Euro Area Non-Financial Corporations

“…Their analysis rejects LPE and shows that the inclusion of variables measuring the availability of external finance (subsidies, leverage and financing constraints) significantly affects firm growth. 9 See amongst others Carpenter and Petersen (2002), Lang, Ofek and Stulz (1996), Nickell and Nicolitsas (1999) or Hernando and Martínez-Carrascal (2008). 10 See Wachtel (2003), Levine (2005) and Papaioannu (2007) for comprehensive surveys of this literature, showing the development from country level studies to studies that began to exploit industry and firm level data.…”

Determinanty inwestycji przedsiębiorstw w środki trwałe. Zależność od cash flow i warunków kredytowych / Determinants of corporate investment in fixed capital. Cash flow and credit conditions sensitivity

“…Model nie uwzględnia bezpośrednio kosztu kapitału, lecz przybliża go przez efekty indywidualne i czasowe [Bond i in. 2003;Hernando, Martínez-Carrascal 2008].…”

“…w [Bond i in. 2003;Hernando, Martínez-Carrascal 2008;Martínez-Carrascal, Ferrando 2008]). Mechanizm korekty błędem jest statystycznie istotny i mieści się w odpowiednim przedziale, gwarantującym dążenie do poziomu równowagi.…”