Inventory investment, global engagement, and financial constraints in the UK: Evidence from micro data

Alessandra Guariglia and Simona Mateut

Journal of Macroeconomics, 2010, vol. 32, issue 1, 239-250

Abstract: We use a panel of 9381 UK firms to study the links between firms' global engagement status and their financial health. We estimate inventory investment equations augmented with a financial composition variable, and interpret the sensitivity of inventory investment to the latter as a measure of the strength of the financial constraints faced by firms. We find that smaller, younger, and more risky firms; and firms that do not export and are not foreign owned exhibit higher sensitivities. Moreover, global engagement substantially reduces the sensitivities displayed by the former categories of firms: this suggests that it shields firms from financial constraints.

Keywords: Financial; constraints; Global; engagement; Inventory; investment (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (53)

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Working Paper: Inventory Investment, Global Engagement, and Financial Constraints in the UK: Evidence from Micro Data (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:32:y:2010:i:1:p:239-250

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