The impact of financial variables on firms' real decisions: Evidence from Spanish firm-level data

Ignacio Hernando and Carmen Martínez-Carrascal
Authors registered in the RePEc Author Service: Carmen Martinez Carrascal

Journal of Macroeconomics, 2008, vol. 30, issue 1, 543-561

Abstract: This paper analyses the impact of alternative measures of firms' financial health on their investment and employment decisions, using a large-scale panel dataset of Spanish firms over the period 1985-2001. The paper pays particular attention to the non-linear nature of the relationship between firms' financial position and their demand of productive factors. Our results show that corporate financial position affects business activity and that this impact is more intense when financial pressure exceeds a certain threshold. Alternative functional forms to capture the non-linearity of this relationship have also been analyzed and cannot be discarded.

Date: 2008
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Citations: View citations in EconPapers (29)

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Related works:
Chapter: The impact of financial variables on firms’ real decisions: evidence from Spanish firm-level data (2005)
Working Paper: The impact of financial variables on firms' real decisions: evidence from Spanish firm-level data (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:30:y:2008:i:1:p:543-561

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