Search results for " cash equivalents"
showing 3 items of 3 documents
Corporate Investment, Debt and Liquidity Choices in the Light of Financial Constraints and Hedging Needs
2015
We examine firms' simultaneous choice of investment, debt financing and liquidity in a large sample of US corporates between 1980 and 2014. We partition the sample according to the firms' financial constraints and their needs to hedge against future shortfalls in operating income. In contrast to earlier work, our joint estimation approach shows that cash flows affect the corporate decisions of unconstrained firms more strongly than those of constrained firms. Investment-cash flow sensitivities are particularly intense for unconstrained firms with high hedging needs. Investment opportunities (as proxied by Q), however, play a larger role for constrained firms with the effects being strongest…
Sensitivity of external resources to cash flow under financial constraints
2014
Abstract This paper explores the external financing–cash flow relationship in capital structure theory by comparing unlisted (financially constrained) and listed (financially unconstrained) companies. We postulate that investment is determined endogenously in the case of unlisted firms, as they are strongly dependent on internally generated funds (cash flow). Consequently, unlisted firms invest their cash flow in profitable projects, using any residual cash flow to increase their holdings of safe assets. In turn, listed companies determine their investment exogenously and may reduce leverage if they raise an excess of cash flow. As a result, listed companies would react more negatively to s…
A CRITICAL STUDY CONCERNING THE PREPARATION OF THE STATEMENT OF CASH FLOWS THROUGH THE INDIRECT METHOD IN ROMANIA
2012
Although not bound by law, by option, small and medium entities from Romania can prepare the statement for the modifications within their equity and / or the statement of cash flows. When companies select this option, any decision made by the consumer of accounting information is better founded, from the perspective of information sources that it uses, rather than the opposite, because the users of accounting information about a company are almost always interested by the way in which the company generates and uses cash and cash equivalents. In this paper we present the particularities implied in Romania by the preparation of the statement of cash flows using the indirect method.