REGIONAL DISPARITIES AND INVESTMENT–CASH FLOW SENSITIVITY: EVIDENCE FROM CHINESE LISTED FIRMS

Jianjun Sun and Nobuyoshi Yamori

Pacific Economic Review, 2009, vol. 14, issue 5, 657-667

Abstract: In China, regional disparities are significant. We find that firms in inland regions rely more on their internal funds in terms of their investment activities than those in coastal regions, and that the sensitivity gap between inland and coastal firms widened in the recent contractionary monetary policy period. This suggests that firms in inland regions find it harder to obtain outside funds due to the unfavourable social and economic environments they face. Our findings suggest that capital markets in China respond rationally to the potential impact of regional disparities on a firm's performance.

Date: 2009
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https://doi.org/10.1111/j.1468-0106.2009.00477.x

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Working Paper: Regional disparities and investment-cash flow sensitivity: Evidence from Chinese listed firms (2009)
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