Investment, Financing Constraints, and Internal Capital Markets: Evidence from the Advertising Expenditures of Multinational Firms

• 成果类型: Article
• 署名作者: Fee, C. Edward; Hadlock, Charles J.; Pierce, Joshua R.
• 署名单位: Michigan State University; University of South Carolina System; University of South Carolina Columbia
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn059
• 发表日期: 2009
• 页码: 2361
• 关键词: research-and-development; cash flow sensitivities; corporate-investment; panel; performance; management; liquidity; COSTS; debt

摘要

We find a significant positive relation between a firm's advertising spending in the United States and its contemporaneous foreign cash flow. This relation holds even after controlling for factors that should be related to the optimal level of domestic advertising, and it is stronger for subsets of firms that we expect to be relatively more financially constrained. Our evidence supports the hypothesis that there is a causal and economically substantial link between cash flow and investment spending, even for intangible investments such as advertising. Our evidence also suggests that firms have active internal capital markets in which capital is moved across geographic regions.