The real effects of financial constraints: Evidence from a financial crisis

TLDR: The authors survey 1,050 chief financial officers (CFOs) in the U.S., Europe, and Asia to assess whether their firms are credit constrained during the global financial crisis of 2008 and find that constrained firms planned deeper cuts in tech spending, employment, and capital spending.

About: This article is published in Journal of Financial Economics.The article was published on 2010-09-01 and is currently open access. It has received 1351 citations till now. The article focuses on the topics: Credit crunch & Financial crisis.

Figures

Figure 5: This figure displays the proportion of firms indicating how they fund their investment when external capital is limited. Responses are averaged within sample partitions based on size, ownership, credit ratings, and financial constraint. See text for additional details.

Figure 1: This figure displays firms’ planned changes (% per year) in technology expenditures, capital expenditures, marketing expenditures, total number of domestic employees, cash holdings, and dividend payments as of the fourth quarter of 2008 (crisis peak period). Responses are averaged across firms within categories determined according to size (sales revenue), ownership form, and credit ratings. See text for additional details.

Figure 2: This figure displays U.S. firms’ planned changes (% per year) in technology expenditures, capital expenditures, marketing expenditures, total number of domestic employees, cash holdings, and dividend payments as of the fourth quarter of 2008 (crisis peak period). Responses are averaged within sample partitions based on the survey measure of financial constraint. See text for additional details.

Figure 3: This figure displays cash savings (the ratio of cash and liquid securities to total assets) at the time of the crisis peak (2008Q4) and one year prior. Responses are averaged within sample partitions based on the survey measure of financial constraint. See text for additional details.