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Author/Editor:
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Vadim Khramov
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Publication Date:
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April 01, 2012
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Electronic Access:
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Free Full text
(PDF file size is 861KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper uses the financial crisis of 2008 as a natural experiment to demonstrate that when measuring investment-cash flow sensitivity, the value of a firm''s assets that can be used as collateral should be taken into account. Using panel data on U.S. firms from 1990 to 2011, it was found that the share of physical capital in assets has a strong influence on investment-cash flow sensitivity, which decreased substantially after the crisis when banks changed their expectations about the value of assets on firms'' balance sheets. This paper deepens our understanding of firms'' investment behavior.
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Order a print copy
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Series:
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Working Paper No. 12/97
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Frequency:
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Biannually
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Subject(s):
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Asset management | Capital | Economic models | Financial crisis | Global Financial Crisis 2008-2009
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Author's Keyword(s):
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Financial Crisis | Asymmetric Effects | Investment-Cash Flow Sensitivity |
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