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Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/8244

Title: Investment-sensitivities or cash-sensitivities? An evaluative framework for measures of financial constraints
Authors: D'ESPALLIER, Bert
Issue Date: 2007
Citation: EFA Doctoral tutorial, Ljubljana.
Abstract: We evaluate two models commonly used for measuring financial constraints in their ability to discriminate between constrained and unconstrained firms. We compute firm-specific estimates for the cash flow sensitivity of investment (CFSI), and the cash flow sensitivity of cash (CFSC) and provide a framework that summarizes the performance of each model into a single numerical metric. We argue that this ex-post approach provides interesting advantages over the traditional operationalization, in which firms are classified ex-ante on a theoretical basis. Our findings suggest the superiority of the CFSI model over the CFSC model for a sample of manufacturing SMEs in Belgium.
URI: http://hdl.handle.net/1942/8244
Category: C2
Type: Conference Material
Appears in Collections: Research publications

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