Investment and financing decisions of private and public firms
| Autor: | Iwan Meier, Malte Janzen, Wolfgang Drobetz |
|---|---|
| Rok vydání: | 2019 |
| Předmět: |
Finance
050208 finance Free cash flow business.industry Agency cost 05 social sciences 050201 accounting Investment (macroeconomics) Market liquidity Incentive Shareholder Accounting 0502 economics and business Agency (sociology) Business Management and Accounting (miscellaneous) Stock market Cash flow Business Empirical evidence Stock (geology) |
| Zdroj: | Journal of Business Finance & Accounting. 46:225-262 |
| ISSN: | 0306-686X |
| DOI: | 10.1111/jbfa.12367 |
| Popis: | We examine differences in the allocation of cash flow between Western European private and public firms. Public firms have a higher investment‐cash flow sensitivity than comparable private firms. This difference is not attributable to more severe financing constraints of public firms. Instead, because differences in investment‐cash flow sensitivities are only observed for the unexpected portion of firms’ cash flow, the empirical evidence supports an agency‐based explanation. Similar patterns are observable for the expected and unexpected portion of firms’ shareholder distributions. Our results are driven by firms from countries with low ownership concentration and more liquid stock markets, where shareholders have lower incentives to monitor. The results are also more pronounced for public firms with low industry Tobin's q and high free cash flow, which are more prone to suffer from agency problems. |
| Databáze: | OpenAIRE |
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