Where Are the Fragilities? The Relationship Between Firms' Financial Constraints, Size, and Age

Carlos Carreira () and Filipe Silva ()

No 2012-12, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: Recessions and financial crisis increase financial constraints and disproportionally affect constrained firms. This paper investigates the differences in firms’ financial constraints between sectors using a cash to cash-flow rationale (Almeida et al., 2004) and a firm specific index of constraints (Hovakimien and Hovakimien, 2009). Interpreting higher sensitivities of cash to cash flow as evidence of higher constraints, we find that the relationships between firm size, firm age and constraints are, in general, non-monotonic and not robust to economic sector disaggregation, which contrasts with previous findings.

Keywords: Financial constraints; Financial crises; Firm size; Firm age; Firm-level studies; Portugal. (search for similar items in EconPapers)
JEL-codes: D92 G32 L00 L2 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-09
New Economics Papers: this item is included in nep-bec
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Citations: View citations in EconPapers (1)

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Related works:
Chapter: WHERE ARE THE FRAGILITIES? THE RELATIONSHIP BETWEEN FIRMS' FINANCIAL CONSTRAINTS, SIZE, AND AGE (2012)
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