Download This PaperInvestment - Cash Flow Sensitivity and Financing Constraints: New Evidence from Indian Business Group Firms
42 Pages Posted: 16 Mar 2005 Last revised: 1 Aug 2012
Date Written: February 1, 2010
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.
Keywords: investment, cash flows, business groups, financing constraints, India
JEL Classification: G30, G31, L20
Suggested Citation: Suggested Citation
Rejie George
Indian Institute of Management Bangalore ( email )
Bannerghatta Road
Bangalore, Karnataka 560076
India
+91-80-26993042 (Phone)
+91-80-26584050 (Fax)
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