Are green firms more financially constrained? The sensitivity of investment to cash flow

Tommaso Oliviero (), Sandro Rondinella () and Alberto Zazzaro ()
Additional contact information
Sandro Rondinella: University of Calabria

No 189, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: Green investment by private companies is essential to sustainable growth paths in advanced economies. Whether, and to what extent, investments by green firms are hampered by lack of external finance is an open question. We estimate the sensitivity of investment to internal finance in firms engaging in green innovation, finding that the elasticity of investment to cash flow is four times less for green than for non-green firms. This result is stronger among smaller firms and robust to alternative definitions of "green firms". Our findings indicate that green firms are less financially constrained, consistent with the growing perception of the importance of the green transition, which potentially affects financial investors outside the company.

Keywords: Green investment; cash flow; external finance; financial constraints (search for similar items in EconPapers)
JEL-codes: E22 G30 Q55 (search for similar items in EconPapers)
Pages: 44
Date: 2025-01
New Economics Papers: this item is included in nep-cfn, nep-ene, nep-env and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir189.pdf First version, 2025 (application/pdf)

Related works:
Working Paper: Are green firms more financially constrained? The sensitivity of investment to cash flow (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:189

Access Statistics for this paper

More papers in Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Maurizio Mariotti ().