Investment-cash flow sensitivity and financing constraints: new evidence from Indian business group firms

Document Type

Article

Publication Title

Journal of Multinational Financial Management

Abstract

A controversy exists on the use of the investment–cash flow sensitivity as a measure of financing constraints of firms. We re-examine this controversy by analyzing firms affiliated to Indian business groups. We find a strong investment–cash flow sensitivity for both group-affiliated and independent firms, but no significant difference in the sensitivity between them. Additional tests consistently demonstrate that investment–cash flow sensitivity of Indian group affiliated firms is not significantly lower relative to unaffiliated firms.

Publication Date

1-4-2011

Publisher

Elsevier

Volume

Vol.21

Issue

Iss.2

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