Financial Flexibility , Corporate Investment and Performance 1

Content Provider	Semantic Scholar
Author	Arslan, Özgür Florackis, Chrisostomos Ozkan, Aydin
Copyright Year	2011
Abstract	This study examines the impact of financial flexibility on the investment and performance of 1,068 non-financial corporations that were significantly affected by the 1997-1998 Asian crisis. We find that firms can attain financial flexibility, primarily through conservative leverage policies and less commonly through large cash holdings. Our analysis shows that firms that are financially flexible prior to the crisis (i) have a greater ability to take investment opportunities, (ii) rely much less on the availability of internal funds to invest, and (iii) perform better than less flexible firms during the crisis. Our results also suggest that leverage-based and cash-based flexibility indicators are better predictors of corporate investment and performance than traditional measures of financial constraints (e.g. firm size, dividend payout, firm age and business group affiliation). JEL classification: G31; G32
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2011-Braga/papers/0466.pdf
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article