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Costly External Financing, Investment Timing, and Investment Cash Flow Sensitivity: A Reformulation of the Problem

International Research Journal of Finance and Economics, Vol. 19, pp. 107-113, 2008

7 Pages Posted: 7 Apr 2009 Last revised: 24 Dec 2013

Anis Zouari

University of Sfax - Institute of the High Business Studies of Sfax (IHEC)

Date Written: September 1, 2008

Abstract

This paper examines the relation between the external financing cost and the choice of the investment timing. Contrary to Lyandres (2007), this paper not only takes in consideration the variation of the investment but also the variation of its payoff. Results show that firms don't present the same degree of the investment-cash-flow sensitivity since this relation, which seems to be non-monotonic, is influenced by the evolutions of the financial cost and the investment amount.

Keywords: External financing, Investment, Cash flow

JEL Classification: G31

Suggested Citation

Zouari, Anis, Costly External Financing, Investment Timing, and Investment Cash Flow Sensitivity: A Reformulation of the Problem (September 1, 2008). International Research Journal of Finance and Economics, Vol. 19, pp. 107-113, 2008. Available at SSRN: https://ssrn.com/abstract=1373859

Anis Zouari (Contact Author)

University of Sfax - Institute of the High Business Studies of Sfax (IHEC) ( email )

Sfax
Tunisia

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