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Issue 5(1), October 2010 -- Paper Abstracts
Girard  (p. 9-22)
Cooper (p. 23-32)
Kunz-Osborne (p. 33-41)
Coulmas-Law (p.42-46)
Stasio (p. 47-56)
Albert-Valette-Florence (p.57-63)
Zhang-Rauch (p. 64-70)
Alam-Yasin (p. 71-78)
Mattare-Monahan-Shah (p. 79-94)
Nonis-Hudson-Hunt (p. 95-106)



JOURNAL OF ACCOUNTING AND FINANCE

Investment and Financing Constraints


Author(s): Nathalie Moyen, Stefan Platikanov

Citation: Nathalie Moyen, Stefan Platikanov, (2013) "Investment and Financing Constraints," Journal of Accounting and Finance, Vol. 13, Iss. 3, pp. 29 - 50

Article Type: Research paper

Publisher: North American Business Press

Abstract:

We investigate whether the sensitivity of corporate investment to internal cash flows is related to
financing constraints. Besides financing constraints, measurement error in Tobin's q is another
competing explanation for the sensitivity, suggested in the literature. Controlling for measurement errors
in Tobin's q and using a parsimonious model specification, we find that investment-cash flow sensitivities
are positive and vary with financing constraints. Measurement errors in Tobin's q do not explain away
the sensitivities for firms facing financing constraints. Evidence of this first-order linear relationship
between investment and internal funds are consistent with the larger literature documenting the effects of
financing frictions on investment.