Inventory Investment, Global Engagement, and Financial Constraints in the UK: Evidence from Micro Data

Simona Mateut and Alessandra Guariglia

Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)

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: 2009-09
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Journal Article: Inventory investment, global engagement, and financial constraints in the UK: Evidence from micro data (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcfc:09/09

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