Investment Cash Flow Sensitivity and Managerial Optimism: A Literature Review Via the Classification Scheme Technique

Review of Finance and Banking, Vol. 5, Issue 1, June 2013

21 Pages Posted: 1 Apr 2013 Last revised: 12 Jun 2013

See all articles by Ezzeddine Ben Mohamed

Ezzeddine Ben Mohamed

University of Sfax

Amel Baccar

University of Sfax - Faculty of Economics and Management

Abdelfatteh Bouri

University of Sfax - Faculty of Economics and Management (FSEGS)

Date Written: March 28, 2013

Abstract

In this paper, we present a literature review and classification scheme for investment cash flow sensitivity under behavioral corporate finance. The former consists of all published articles between 2000 and 2011 in different journals that are appropriate outlets for BCF research. The articles are classified and results of these are presented and analyzed. The classification of articles was based on nine criteria; journals, date of publication, paper nature, the context of the study adopted behavioral biases, adopted approach, behavioral biases measurement, the adopted assumption, econometric approach and empirical findings. Literature on investment cash flow sensitivity under behavioral corporate finance isn’t well developed. In fact, the behavioral corporate finance is very young. Our review shows that behavioral biases (optimism and overconfidence) have an explanatory power and they can succeed to explain the dependence of corporate investment on the internal cash flow availability. This result is protected in the most cases by the some restrictive assumptions: the absence of agency costs and asymmetric information. Based on the review, suggestions for future research are likewise provided.

Keywords: Behavioral corporate finance, literature review, classification scheme technique, investment cash flow sensitivity, optimism and overconfidence

JEL Classification: G02, G30, G31, G32

Suggested Citation

Ben Mohamed, Ezzeddine and Baccar, Amel and Bouri, Abdelfatteh, Investment Cash Flow Sensitivity and Managerial Optimism: A Literature Review Via the Classification Scheme Technique (March 28, 2013). Review of Finance and Banking, Vol. 5, Issue 1, June 2013. Available at SSRN: https://ssrn.com/abstract=2240827 or http://dx.doi.org/10.2139/ssrn.2240827

Ezzeddine Ben Mohamed (Contact Author)

University of Sfax ( email )

COFFIT-FSEG SFAX
Tunisia
+216 21750064 (Phone)

Amel Baccar

University of Sfax - Faculty of Economics and Management ( email )

Route de l'aéroport km 4.5
Sfax, 3018
Tunisia

Abdelfatteh Bouri

University of Sfax - Faculty of Economics and Management (FSEGS) ( email )

Road of Airport, Km 4
Sfax, sfax 3018
Tunisia

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