Investment-cash flow sensitivity and financing constraints: New evidence from Indian business group firms

Rejie George, Rezaul Kabir and Jing Qian

Journal of Multinational Financial Management, 2011, vol. 21, issue 2, 69-88

Abstract: A controversy exists on the use of the investment-cash flow sensitivity as a measure of financing constraints of firms. We re-examine this controversy by analyzing firms affiliated to Indian business groups. We find a strong investment-cash flow sensitivity for both group-affiliated and independent firms, but no significant difference in the sensitivity between them. Additional tests consistently demonstrate that investment-cash flow sensitivity of Indian group affiliated firms is not significantly lower relative to unaffiliated firms.

Keywords: Investments; Cash; flows; Financing; constraints; Business; groups; India (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:21:y:2011:i:2:p:69-88

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