			Home About us Contact

Flow Sensitivity (flow + sensitivity)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	83%

Selected Abstracts

The Interdependent and Intertemporal Nature of Financial Decisions: An Application to Cash Flow Sensitivities

THE JOURNAL OF FINANCE, Issue 2 2010
VLADIMIR A. GATCHEV
ABSTRACT We develop a dynamic multiequation model where firms make financing and investment decisions jointly subject to the constraint that sources must equal uses of cash. We argue that static models of financial decisions produce inconsistent coefficient estimates, and that models that do not acknowledge the interdependence among decision variables produce inefficient estimates and provide an incomplete and potentially misleading view of financial behavior. We use our model to examine whether firms are constrained from accessing capital markets. Unlike static single-equation studies that find firms underinvest given cash flow shortfalls, we conclude that firms maintain investment by borrowing. [source]

Impact of the QFII Scheme on Investment-Cash Flow Sensitivity,

ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, Issue 3 2009
Jung-Hua Hung
Abstract Taiwan is an important emerging economy which has adopted a progressive strategy to open up its securities markets, mainly through the QFII (Qualified Foreign Institutional Investor) scheme. This paper examines Taiwan's QFII experience so as to determine whether the implementation of such a policy has helped reduce corporate investment-cash flow sensitivity. Empirical results suggest that the launching of the QFII program as an interim institutionalization strategy to attract foreign capital into Taiwan's securities markets has been successful in relaxing corporations' investment-cash flow sensitivity. [source]

Cash Flow Sensitivity of Investment

EUROPEAN FINANCIAL MANAGEMENT, Issue 1 2009
Armen Hovakimian
G30; G31; G32 Abstract Investment cash flow sensitivity is associated with both underinvestment when cash flows are low and overinvestment when cash flows are high. The accessibility of external capital is positively correlated with cash flows, intensifying investment cash flow sensitivity. Managers actively counteract the variations in internal and external liquidity by accumulating working capital when liquidity is high and draining it when liquidity is low. These results imply that cash flow sensitive firms face financial constraints, which are binding in low cash flow years. Traditional indicators of financial constraints, such as size and dividend payout, successfully distinguish firms that may potentially face constraints, but are less successful in distinguishing between periods of tight and relaxed constraints. These periods are much more clearly separated by the KZ index, which, on the other hand, is less successful in identifying firms that are likely to face liquidity constraints. [source]

Effect of ownership structure on underinvestment and overinvestment: empirical evidence from Spain

ACCOUNTING & FINANCE, Issue 2 2009
Julio Pindado
G31; G32 Abstract This paper investigates how ownership affects the investment-cash flow sensitivity by taking into account the non-linearities of ownership with respect to firm value, and using a free cash flow index and a criterion for financial constraints to disentangle underinvestment and overinvestment. Interesting results are provided by estimating using the Generalized Method of Moments to eliminate the endogeneity problem. The alignment of interests between owners and managers and the monitoring by concentrated ownership both alleviate the sensitivity of investment to cash flow both in underinvestor and overinvestor firms. However, in the presence of controlling owners, underinvestment and overinvestment are exacerbated. [source]

Modelling two-dimensional steady-state groundwater flow and flow sensitivity to boundary conditions in blanket peat complexes

HYDROLOGICAL PROCESSES, Issue 2 2005
D. R. Lapen
Abstract This study used a two-dimensional steady-state finite-element groundwater flow model to simulate groundwater flow in two Newfoundland blanket peat complexes and to examine flow system sensitivity to changes in water table recharge and aquifer properties. The modelling results were examined within the context of peat-forming processes in the two complexes. Modelled flow compared favourably with observed flow. The sensitivity analyses suggested that more highly decomposed bog peat along bog margins probably has/had a positive impact on net peat accumulation within bog interiors. Peat with lower hydraulic conductivity along bog margins effectively impedes lateral drainage, localizes water table drawdown to extreme bog margins, and elevates water tables along bog interiors. Peat formation and elevated water tables in adjacent poor fens/laggs currently rely on placic and ortstein horizons impeding vertical drainage and water flow inputs from adjacent bogs. Modest reductions in atmospheric recharge were found to govern bog-flow-system geometries in a way that would adversely affect paludification processes in adjacent fens/laggs. Copyright © 2004 John Wiley & Sons, Ltd. [source]