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|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.|
|Type: ||Conference Material|
|Appears in Collections: ||Research publications|
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