What drives investment–cash flow sensitivity around the World? An asset tangibility Perspective |
| |
| Institution: | 1. School of Banking and Finance, University of New South Wales, Australia;2. Naveen Jindal School of Business, University of Texas at Dallas, U.S.;3. Research School of Finance, Actuarial Studies and Statistics, Australian National University, Australia;1. School of Accounting, UNSW Business School, University of New South Wales, Australia;2. Whitman School of Management, Syracuse University, United States;3. Lindner College of Business, University of Cincinnati, United States;4. School of Banking and Finance, UNSW Business School, University of New South Wales, Australia |
| |
| Abstract: | Motivated by ongoing debates on investment–cash flow sensitivity (ICFS) and its documented decline and disappearance in the U.S., we investigate the determinants of ICFS. Using firm-level data across 41 countries for the 1993–2013 period, we document an important role of asset tangibility in explaining the patterns in ICFS. Asset tangibility affects ICFS through two channels: investment intensity and cash flow persistence. As the share of tangible capital, investment and cash flow persistence has fallen in developed economies, ICFS has declined. In contrast, as developing economies operate with more tangible capital, have higher investment rates and more persistent cash flows, their ICFS is more stable. The results support our explanation of ICFS as a reflection of capital (investment) intensity and income predictability, rather than a measure of financial constraints. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
