The investment decision of a firm allowing for technological change is investigated. Based on the premise that technological change requires capital investment, a simple Q model of capital investment, which describes the investment behaviour of a perfectly competitive firm, is developed. The model is estimated using US manufacturing sector data over the period 1947–87 and the data provide support for the model.
In this paper we re‐examine commercial banks' lending behavior taking into account changes in the stance of monetary policy in conjunction with changes in financial sector uncertainty. Our empirical findings, gathered from a very large data set covering all banks in the USA between 1986 and 2000, cast substantial doubt on the presence of a bank lending channel for the USA. We also show that financial uncertainty has an important and significant role in the monetary policy transmission mechanism which varies considerably across bank categories and the strength of banks' balance sheets.
We examine whether business groups' influence on cash holdings depends on ownership. Group affiliation can increase firms' agency costs or benefit firms by providing an internal capital market, especially in transition economies characterized by weak investor protection and difficult external capital acquisition. A hand-collected dataset of Chinese firms reveals that group affiliation decreases cash holdings, alleviating the free-cash-flow problem of agency costs. State ownership and control of listed firms moderate this benefit, which is more pronounced when the financial market is less liquid. Group affiliation facilitates related-party transactions, increases debt capacity and decreases investment-cash-flow sensitivity and overinvestment. In transitional economies, privately controlled firms are more likely to benefit from group affiliation than state-controlled firms propped up by the government.
In: Cai , W , Zeng , C , Lee , E & Ozkan , N 2016 , ' Do business groups affect corporate cash holdings? Evidence from a transition economy ' , China Journal of Accounting Research , vol. 9 , no. 1 , pp. 1-24 . https://doi.org/10.1016/j.cjar.2015.10.002
We examine whether business groups' influence on cash holdings depends on ownership. Group affiliation can increase firms' agency costs or benefit firms by providing an internal capital market, especially in transition economies characterized by weak investor protection and difficult external capital acquisition. A hand-collected dataset of Chinese firms reveals that group affiliation decreases cash holdings, alleviating the free-cash-flow problem of agency costs. State ownership and control of listed firms moderate this benefit, which is more pronounced when the financial market is less liquid. Group affiliation facilitates related-party transactions, increases debt capacity and decreases investment-cash-flow sensitivity and overinvestment. In transitional economies, privately controlled firms are more likely to benefit from group affiliation than state-controlled firms propped up by the government.
