Regional disparities and investment-cash flow sensitivity: Evidence from Chinese listed firms
Jianjun Sun and
Nobuyoshi Yamori ()
MPRA Paper from University Library of Munich, Germany
In China, regional disparities are important. We examine the difference in the sensitivity of investment to cash flow between firms in inland regions and those in coastal regions. By using the financial data of Chinese listed firms, we found that firms in inland regions rely more on their internal funds in terms of their investment activities than those in coastal regions and that the sensitivity gap between inland and coastal firms widened in the recent contractionary monetary policy period. This suggests that firms in inland regions are harder to obtain outside funds due to unfavorable social and economic environments for inland firms. Our findings suggest that capital markets in China respond rationally to the potential impact of regional disparities on a firm’s performance.
Keywords: sensitivity of investment to cash flow; sensitivity gap; regional disparities; Chinese economy (search for similar items in EconPapers)
JEL-codes: G14 G31 O16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-geo and nep-tra
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https://mpra.ub.uni-muenchen.de/14858/1/MPRA_paper_14858.pdf original version (application/pdf)
Journal Article: REGIONAL DISPARITIES AND INVESTMENT–CASH FLOW SENSITIVITY: EVIDENCE FROM CHINESE LISTED FIRMS (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14858
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