Enterprise Finance and Investment in Listed Hungarian Firms

Enrico Perotti and Luka Vesnaver

No 4194, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies the financing of enterprise investment in listed Hungarian firms during the first years of transition. These firms were selected for listing on the exchange and presumably had better access to external capital. In particular, we look for evidence of financial constraints that limit real investment and attempt to identify the effect of different ownership and governance structures. The empirical results indicate significant financial constraints even among the better-known firms in the period from 1992 to 1998. Consistent with studies from other countries, we find evidence that foreign-owned firms do not suffer from limited external finance. Previous leverage can strain investment, suggesting that hard budget constraints are binding. State ownership does not alleviate capital constraints and larger firms do not appear to be less constrained than the smaller firms, which contrasts with the evidence in Western countries.

Keywords: Governance; Financial constraints; Transition; Foreign investment (search for similar items in EconPapers)
JEL-codes: G31 P23 (search for similar items in EconPapers)
Date: 2004-01
New Economics Papers: this item is included in nep-cfn, nep-mfd and nep-tra
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Citations: View citations in EconPapers (13)

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