In this study, we investigate the extent to which corporate investments are sensitive to internal and external funds. The main novelty of this study lies in our employment of the quantile regression method to account for the possibility that the level of investments itself is a key
determinant of its sensitivities to financing sources. Our empirical investigation reveals that the sensitivities of investments to both internal and external funds indeed tend to increase with the level of investments. More importantly, internal funds have a greater impact on investments
than do external funds at all levels of investments. This result holds across different groups of firms classified by proxies for financial constraints, e.g. firm size and dividend payouts. In contrast, external funds have a greater impact on the amount of liquid assets than do internal funds. These results suggest that internal funds (external funds) are more likely to be used to finance investments (increase liquid assets). Overall, the observed patterns of investment financing conform to the predictions of the pecking order theory.
JEL Classification: G31, G32
Keywords: corporate investments, internal funds, external funds, pecking order, financial
constraints, quantile regression
학회소식
[2010년 제 1차] The Sensitivities of Corporate Investments to Inter
작성자 : 관리자
조회수 : 827
게시일 :
2010-02-23
