Financial Constraints and Investment: The Swiss Case

27 Pages Posted: 27 Sep 2001

See all articles by Francois Lhabitant

Francois Lhabitant

Kedge Capital Fund Management; EDHEC Business School

Olivier Tinguely

CM Capital Markets

Date Written: April 2001


We study the empirical link that exists between investment and cash flow in the Swiss financial market. We follow the standard method introduced by Fazarri, Hubbard and Peterson (1988), with two major improvements. The firms' classification method is dynamic, and the estimation procedure allows for testing differences between groups. We pay particular attention to two aspects: information asymmetry and the business cycle. First, due to local particularities, Swiss firms can be differentiated according to precise measures of asymmetric information, leading to a non-ambiguous interpretation of the link between investment-cash flow sensitivities and the intensity of financial constraints. Second, the sample is split into two sub-periods: a boom and a recession period.

JEL Classification: D82, G31, G32

Suggested Citation

Lhabitant, Francois-Serge and Tinguely, Olivier, Financial Constraints and Investment: The Swiss Case (April 2001). Available at SSRN: or

Francois-Serge Lhabitant (Contact Author)

Kedge Capital Fund Management ( email )

28-30 The Parade
St Helier, JE1 1ZZ


EDHEC Business School ( email )

393 Prom. des Anglais
Nice, 06200

Olivier Tinguely

CM Capital Markets ( email )

c. Ochiandano 2
28023 Madrid

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