The impact of cash flow volatility on discretionary investment and the costs of debt and equity financing

• 成果类型: Article
• 署名作者: Minton, BA; Schrand, C
• 署名单位: University System of Ohio; Ohio State University; University of Pennsylvania
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(99)00042-2
• 发表日期: 1999
• 页码: 423-460
• 关键词: CASH FLOW VOLATILITY; INVESTMENT; cost of equity financing; Cost of debt financing

摘要

We show that higher cash flow volatility is associated with lower average levels of investment in capital expenditures, R&D, and advertising. This association suggests that firms do not use external capital markets to fully cover cash flow shortfalls but rather permanently forgo investment. Cash flow volatility also is associated with higher costs of accessing external capital, Moreover, these higher costs, as measured by some proxies, imply a greater sensitivity of investment to cash flow volatility. Thus, cash flow volatility not only increases the likelihood that a firm will need to access capital markets, it also increases the costs of doing so. (C) 1999 Elsevier Science S.A. All rights reserved. JEL classification: G31.