TY - JOUR
T1 - Do financial laws affect investment determinants? Some European evidence
AU - Utrero-González, Natalia
PY - 2007/1/1
Y1 - 2007/1/1
N2 - Investment-cash flow sensitivities have been extensively analysed. One reason for the excess sensitivity between investment and internal resources is market imperfections. In this article, we try to determine whether this relationship is either affected by the nature of the financial system or associated to other firmspecific determinants such as size or industry. Results show that prudent banking regulation and creditor legal protection reduce investment-cash flow sensitivities, that is, alleviate the inefficiencies associated to asymmetric information and capital market frictions. However, firm characteristics still have a word to say when taking into account financial regulations.
AB - Investment-cash flow sensitivities have been extensively analysed. One reason for the excess sensitivity between investment and internal resources is market imperfections. In this article, we try to determine whether this relationship is either affected by the nature of the financial system or associated to other firmspecific determinants such as size or industry. Results show that prudent banking regulation and creditor legal protection reduce investment-cash flow sensitivities, that is, alleviate the inefficiencies associated to asymmetric information and capital market frictions. However, firm characteristics still have a word to say when taking into account financial regulations.
KW - Financial restrictions
KW - Investment
KW - Investor protection and banking law
U2 - 10.22495/cocv4i3c2p3
DO - 10.22495/cocv4i3c2p3
M3 - Article
SN - 1727-9232
VL - 4
SP - 251
EP - 265
JO - Corporate Ownership and Control
JF - Corporate Ownership and Control
IS - 3 C
ER -