The Interdependent and Intertemporal Nature of Financial Decisions: An Application to Cash Flow Sensitivities

Earnings Management and CSR Disclosure. Family vs. Non-Family Firms

“…To address these concerns, empirical corporate finance literature uses a variety of methods: fixed effects, control variables, lagged variables, generalized method of moments (GMM) [90][91][92][93][94][95][96][97][98][99][100]. Following Li [90], we verified the robustness of our results using two of the above techniques to mitigate the endogeneity concerns, using lagged independent variables and fixed effects for year and industry.…”

Cash Flow Sensitivities and the Allocation of Internal Cash Flow

“…Taken together, our analysis suggests that the importance of explicitly imposing adding-up constraints and adding lagged dependent variables is hugely exaggerated by GPT's reliance on a severely unbalanced cash flow identity in their data. Gatchev, Pulvino, and Tarhan (2010). The variables are defined following GPT's Table III.…”

“…Furthermore, we perform two tests to compare our methodologies with those used in previous studies. First , Gatchev, Pulvino, and Tarhan (2010;GPT hereafter) propose that the cash-flow sensitivities should be estimated using a constrained system of equations with the adding-up constraint imposed explicitly. They show that estimating all the cash-flow sensitivities simultaneously without explicitly imposing the constraint leads to 5 Two exceptions are Kaplan and Zingales (1997) and Cleary (1999), who also document that financially constrained firms exhibit a lower investment-cash flow sensitivity than do unconstrained ones.…”

How firms manage their cash flows: an examination of diversification’s effect

“…This section extends our previous analysis to examine the individual components of financing cash flow identified by Dittmar and Duchin (2010) and Gatchev et al (2010) as channels for firms to adjust their cash ratio, in a multivariate format. Separating financing cash flow between debt and equity raised and cash paid out through dividends and repurchases also allows us to distinguish between competing explanations of diversified firms' lower financing cash flow.…”

“…We extend our analysis to estimate regressions of the determinants of cash flows and relate these to firm diversification and other control variables known to be correlated with firm level cash flows (see Almeida and Campello, 2010;Denis and Sibilkov, 2010;Gatchev et. al., 2010).…”