Investment-Cash Flow Sensitivity and Financing Constraints: A Study of Pakistani Business Group Firms

Authors

  • Yasir Mehmood
  • Syed Amjad Farid Hasnu

Keywords:

Investment-Cash flow, 2SLS, Financing constraints, Pakistani Business group Firms

Abstract

A large discrepancy exists on the use of the investment–cash flow sensitivity as a measure of financing constraints of firms. We examine this discrepancy by considering business group affiliated firms in Pakistan. The study includes 58 group affiliated firms and 32 non-group affiliated firms listed on the Karachi Stock Exchange during 2006- 2010. Results of OLS and 2SLS shows a positive investment-cash flow sensitivity for business group affiliated firms and negative investment cash flow sensitivity for non- group affiliated firms. Additional tests accordingly express that investment-cash flow sensitivity of Pakistani group affiliated firms is significantly lower to non-group affiliated firms.

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Published

2020-04-30

Issue

Vol. 5 No. 1 (2020): Review of Socio-Economic Perspectives

Section

Research Articles

License

Authors retain copyright and typically publish under a Creative Commons license (CC BY-NC 4.0), allowing for broad dissemination and reuse.

Important notice: ‘Starting from Vol 10 , Issue 1, 2025 the title will be published under the licence CC BY-NC 4.0.