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New Evidence on Measuring Financial Constraints: Moving Beyond the KZ Index
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In this paper, the authors collected detailed qualitative information from financial filings to categorize financial constraints for a random sample of firms from 1995 to 2004, and used ordered logit models predicting constraints as a function of different quantitative factors.Abstract:
We collect detailed qualitative information from financial filings to categorize financial constraints for a random sample of firms from 1995 to 2004. Using this categorization, we estimate ordered logit models predicting constraints as a function of different quantitative factors. Our findings cast serious doubt on the validity of the KZ index as a measure of financial constraints, while offering mixed evidence on the validity of other common measures of constraints. We find that firm size and age are particularly useful predictors of financial constraint levels, and we propose a measure of financial constraints that is based solely on these firm characteristics.read more
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Corporate social responsibility and access to finance
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The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research
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The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research
Christian Leuz,Peter D. Wysocki +1 more
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Do Financing Constraints Matter for R&D?
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References
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Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?
Steven N. Kaplan,Luigi Zingales +1 more
TL;DR: In this article, the authors investigated the relationship between financing constraints and investment-cash flow sensitivities by analyzing the firms identified by Fazzari, Hubbard, and Petersen as having unusually high investment cash flow sensitivity.
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The determinants and implications of corporate cash holdings
TL;DR: The authors examine the determinants and implications of holdings of cash and marketable securities by publicly traded U.S. firms in the 1971-1994 period and find evidence supportive of a static tradeoff model of cash holdings.
Posted Content
The Determinants and Implications of Corporate Cash Holdings
TL;DR: The authors examined the determinants and implications of holdings of cash and marketable securities by publicly traded U.S. firms in the 1971-1994 period and found that firms with strong growth opportunities and riskier cash flows hold relatively high ratios of cash to total assets.
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Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms
Mark Gertler,Simon Gilchrist +1 more
TL;DR: This article analyzed the response of small versus large manufacturing firms to monetary policy and found that small firms account for a significantly disproportionate share of the manufacturing decline that follows tightening of monetary policy, while large firms initially borrow to accumulate inventories and after a brief period, small firms quickly shed inventories.
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The Cash Flow Sensitivity of Cash
TL;DR: In this paper, the authors empirically estimate the sensitivity of cash using a large sample of manufacturing firms over the 1971 to 2000 period and find robust support for their theory, and hypothesize that constrained firms should have a positive cash flow sensitivity, while unconstrained firms' cash savings should not be systematically related to cash flows.