INVESTMENT-CASH FLOW SENSITIVITY AND FINANCING CONSTRAINTS: A STUDY OF PAKISTANI BUSINESS GROUP FIRMS
Yasir Mehmood and
Syed Amjad Farid Hasnu
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Yasir Mehmood: MS-Banking and Finance, department of management sciences, COMSATS University Islamabad-Abbottabad Campus, Pakistan.
Syed Amjad Farid Hasnu: Professor, department of management sciences, COMSATS University IslamabadAbbottabad Campus, Pakistan.
Review of Socio - Economic Perspectives, 2020, vol. 5, issue 1, 99-128
A large discrepancy exists on the use of the investmentâ€“cash flow sensitivity as a measure of financing constraints of firms. We examine this discrepancy by considering business group affiliated firms in Pakistan. The study includes 58 group affiliated firms and 32 non-group affiliated firms listed on the Karachi Stock Exchange during 2006-2010. Results of OLS and 2SLS shows a positive investment-cash flow sensitivity for business group affiliated firms and negative investment cash flow sensitivity for nongroup affiliated firms. Additional tests accordingly express that investment-cash flow sensitivity of Pakistani group affiliated firms is significantly lower to non-group affiliated firms.
Keywords: Investment-Cash flow; 2SLS; Financing constraints; Pakistani Business group Firms (search for similar items in EconPapers)
JEL-codes: M13 M21 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:aly:journl:202052
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