What drives investment–cash flow sensitivity around the World? An asset tangibility Perspective

Moshirian, Fariborz; Nanda, Vikram; Vadilyev, Alexander A.; Zhang, Bohui

doi:10.1016/j.jbankfin.2016.12.012

Cited by 69 publications

(96 citation statements)

References 42 publications

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“…The evidence obtained by the present study contributes to the understanding of how the process of corporate investments in less developed countries is carried out, as can be identified in Rosseau and Kim (2008), Moshirian et al (2017), Larkin et al (2018), among others, where asset prices tend to reflect their intrinsic value with noise.…”

Section: Introductionmentioning

confidence: 57%

“…Another critical step in this study refers to the results of empirical studies obtained in different environments. Moshirian et al (2017) note that the Q ratio is a determinant of value for investments for developed countries. For underdeveloped or emerging countries, there would be a greater dependence on the generation of cash flows for the achievement of corporate investments.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

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Investment Cash Flow Sensitivity and Tobin’s Q: The Case of Advanced Emerging Markets in Latin America

Figlioli¹,

Lima²

2020

IBR

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This paper examines whether the capital market and the internal generation of cash flows bring relevant information to decisions on corporate investments. For this investigation, we used data from 255 companies located in four Latin American (LA) countries: Brazil, Chile, Mexico and Peru (BCMP countries). The analysis period is from 2000 to 2017. The results indicate that cash flow represents one of the main drivers of corporate investments. In contrast, there were no indications that the capital market translates into a mechanism for transmitting useful information to firm managers about investments. Other drivers of value identified are associated with sales, cash and cash equivalents, and asset tangibility.

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Section: Introductionmentioning

confidence: 57%

Section: Hypotheses Developmentmentioning

confidence: 99%

Investment Cash Flow Sensitivity and Tobin’s Q: The Case of Advanced Emerging Markets in Latin America

Figlioli¹,

Lima²

2020

IBR

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“…The evidence provided for constrained firms is consistent with the financing constraints explanation of ICFS, whereas the findings for unconstrained firms are inconsistent with this view. Moshirian et al (2017) provide evidence that ICFS decreases in advanced economies as the share of tangible capital also decreases. However, they find that ICFS remains significant among the developing countries in their sample, as firms in these countries operate with more tangible assets and persistent cash flows.…”

Section: Related Literaturementioning

confidence: 99%

“…In Panel C of Table 11, we divide our sample according to the ratio of property, plant, and equipment to total assets, which is a measure of tangible capital. Moshirian et al (2017) argue that ICFS disappears for firms with a high level of tangible capital through the investment intensity and cash‐flow persistence channel. Our results are not sensitive to the proportion of tangible investments.…”

Section: Validity Of Icfs As a Measure Of Financial Constraintmentioning

confidence: 99%

What Happened to the Willingness of Companies to Invest After the Financial Crisis? Evidence From Latin American Countries

Özkan

Santillán‐Salgado

Yıldız

et al. 2020

J of Financial Research

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In this article we investigate the changes in corporate investment dynamics in the aftermath of the global financial crisis. Using firm-level data from six Latin American countries from 2002 to 2015, we show that firms are less constrained and have greater ability to invest after the crisis. However, the willingness of firms to invest optimally is reduced. This is supported by strong evidence that during the postcrisis period investment-cash flow sensitivity disappears, investment-q sensitivity increases, and the estimated speeds of adjustment for target investment decrease. Moreover, after the crisis, firms notably increase their efforts to attain optimal cash and leverage levels. Our analysis implies that firms may not always be willing to invest optimally. The willingness to invest optimally appears to be time variant and moves together with the dynamics of cash and leverage policies, albeit in opposite directions. JEL Classification: G33, G34 2 Following research on corporate investment efficiency (e.g., Stein 2003; Chen et al. 2011; Chen et al. 2017; Jiang, Kim, and Pang 2011), we use the sensitivity of investment expenditures to investment opportunities as a measure of investment efficiency. 3 The countries included in the sample-Argentina, Brazil, Chile, Colombia, Mexico, and Peru-are among the relatively fast-growing emerging markets, characterized by greater growth opportunities, albeit facing difficulties in accessing external funds for private and public investment. Research on the corporate investment in Latin American countries is limited. One notable exception is Moshirian et al. (2017), who include firms from Latin American countries in their sample of 41 countries. Also, Magud and Sosa (2015) of the International Monetary Fund investigate corporate investment in Latin American countries and show that growth opportunities and commodity export prices have a positive and leverage has a negative impact on investment.

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“…menemukan bukti hubungan negatif antara pengeluaran R&D dan penerbitan utang dimana perusahaan yang menerbitkan utang memiliki proporsi aset berwujud yang lebih tinggi dan melakukan pengeluaran R&D yang lebih sedikit. PenelitianBrown et al, (2009) mengatakan perusahaan inovatif (yang memiliki pengeluaran R&D tinggi) cenderung memiliki sedikit aset berwujud yang dapat berfungsi sebagai jaminan untuk kredit Moshirian et al, (2017). menekankan pentingnya R&D pada perusahaan di Amerika Serikat.…”

unclassified

PENGELUARAN R&D DAN KINERJA PERUSAHAAN MANUFAKTUR DI BURSA EFEK INDONESIA YANG DIMODERASI OLEH USIA PERUSAHAAN

Setiawan¹,

Harmasanto²

2019

Jurnal Riset Akuntansi Dan Bisnis Airlangga

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The purpose of this study is to examine the effect of research and development expenditure on the company's financial performance and prove the influence of corporate age moderation. The research population consisting of 140 manufacturing companies listed on the Indonesia Stock Exchange was selected using the purposive sampling method. The final sample size is 113 companies that provide annual financial statements from 2012-2017. The unbalanced panel data analysis uses variables in the company's annual reports that are tested using OLS regression. The results found that companies investing in R&D experienced a 3% increase in sales compared to companies that did not spend in R&D. Further testing also found that the age of the company moderated the relationship between R&D expenditure and financial performance, where older companies that invest in R&D produced 0.1% more sales and 0.6% higher profits than younger companies in the manufacturing industry. The conclusion of this study is that the effect of R&D expenditure on sales and net profit cannot be directly felt in the current year. R&D spending like other types of investment requires time to be able to contribute to the company's sales and net profit. The findings of this study provide support that R&D spending is a driving force for innovation in endogenous growth theories.

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What drives investment–cash flow sensitivity around the World? An asset tangibility Perspective

Cited by 69 publications

References 42 publications

Investment Cash Flow Sensitivity and Tobin’s Q: The Case of Advanced Emerging Markets in Latin America

Investment Cash Flow Sensitivity and Tobin’s Q: The Case of Advanced Emerging Markets in Latin America

What Happened to the Willingness of Companies to Invest After the Financial Crisis? Evidence From Latin American Countries

PENGELUARAN R&D DAN KINERJA PERUSAHAAN MANUFAKTUR DI BURSA EFEK INDONESIA YANG DIMODERASI OLEH USIA PERUSAHAAN

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