Investment - Cash Flow Sensitivity and Financing Constraints: New Evidence from Indian Business Group Firms

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Pallathitta, Rejie and Kabir, Rezaul and Qian, Jing (2010) Investment - Cash Flow Sensitivity and Financing Constraints: New Evidence from Indian Business Group Firms. [Report]

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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.
Item Type:Report
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Management and Governance (SMG)
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Link to this item:http://purl.utwente.nl/publications/74067
Official URL:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=683725
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