Corporate investment, cash flow level and market imperfections: The case of Norway

Arbeitspapier

We analyze firms’ investment behavior, differentiating firms according to the cash flow levels they experience during their lifecycles. We consequently consider the firm as the basic unit and not firm-year observations. Firms with persistent positive cash flow show higher investment-cash flow sensitivity than firms with persistent negative cash flow. Independent of the industry they belong to, older firms with positive cash flow show a weaker sensitivity than younger firms with positive cash flow. Firms with persistent negative cash flow are neither younger nor smaller than their counterparts, and their cash flow coefficient can be positive, negative or statistically insignificant. Thus, classifying firms by age or size may not yield a group of firms with similar financial structures.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Memorandum ; No. 2007,03

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Financial constraints ; internal funds ; investment-cash flow sensitivity ; Unternehmensfinanzierung ; Betriebswirtschaftliche Investitionstheorie ; Kapitalflussrechnung ; Norwegen

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mundaca, B. Gabriela ; Nordal, Kjell Bjørn
• Event: Veröffentlichung
• (who): University of Oslo, Department of Economics
• (where): Oslo
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/63042
• Last update: 10.03.2025, 11:44 AM CET