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Cash-flow sensitivities and the allocation of internal cash flow

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Cash-flow sensitivities and the allocation of internal cash flow. / Chang, Xin; Dasgupta, Sudipto; Wong, George et al.
In: Review of Financial Studies, Vol. 27, No. 12, 12.2014, p. 3628-3657.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Chang, X, Dasgupta, S, Wong, G & Yao, J 2014, 'Cash-flow sensitivities and the allocation of internal cash flow', Review of Financial Studies, vol. 27, no. 12, pp. 3628-3657. https://doi.org/10.1093/rfs/hhu066

APA

Chang, X., Dasgupta, S., Wong, G., & Yao, J. (2014). Cash-flow sensitivities and the allocation of internal cash flow. Review of Financial Studies, 27(12), 3628-3657. https://doi.org/10.1093/rfs/hhu066

Vancouver

Chang X, Dasgupta S, Wong G, Yao J. Cash-flow sensitivities and the allocation of internal cash flow. Review of Financial Studies. 2014 Dec;27(12):3628-3657. Epub 2014 Sept 26. doi: 10.1093/rfs/hhu066

Author

Chang, Xin ; Dasgupta, Sudipto ; Wong, George et al. / Cash-flow sensitivities and the allocation of internal cash flow. In: Review of Financial Studies. 2014 ; Vol. 27, No. 12. pp. 3628-3657.

Bibtex

@article{9411cb155feb4dd59bbd8be0c042d4de,
title = "Cash-flow sensitivities and the allocation of internal cash flow",
abstract = "We study how firms allocate cash flow by estimating the cash-flow sensitivities of various uses of cash flow. We decompose cash flow into a transitory and a permanent component and focus on the allocation of the transitory component, which by construction contains little information about future growth opportunities. We find that more financially constrained firms allocate more transitory cash flow to cash savings and direct less toward investment than do less constrained firms, consistent with constrained firms accumulating liquidity to buffer against future financial constraints. We also illustrate several methodological advantages of our approach over alternative methods in previous studies.",
author = "Xin Chang and Sudipto Dasgupta and George Wong and Jiaquan Yao",
year = "2014",
month = dec,
doi = "10.1093/rfs/hhu066",
language = "English",
volume = "27",
pages = "3628--3657",
journal = "Review of Financial Studies",
issn = "0893-9454",
publisher = "Oxford University Press",
number = "12",

}

RIS

TY - JOUR

T1 - Cash-flow sensitivities and the allocation of internal cash flow

AU - Chang, Xin

AU - Dasgupta, Sudipto

AU - Wong, George

AU - Yao, Jiaquan

PY - 2014/12

Y1 - 2014/12

N2 - We study how firms allocate cash flow by estimating the cash-flow sensitivities of various uses of cash flow. We decompose cash flow into a transitory and a permanent component and focus on the allocation of the transitory component, which by construction contains little information about future growth opportunities. We find that more financially constrained firms allocate more transitory cash flow to cash savings and direct less toward investment than do less constrained firms, consistent with constrained firms accumulating liquidity to buffer against future financial constraints. We also illustrate several methodological advantages of our approach over alternative methods in previous studies.

AB - We study how firms allocate cash flow by estimating the cash-flow sensitivities of various uses of cash flow. We decompose cash flow into a transitory and a permanent component and focus on the allocation of the transitory component, which by construction contains little information about future growth opportunities. We find that more financially constrained firms allocate more transitory cash flow to cash savings and direct less toward investment than do less constrained firms, consistent with constrained firms accumulating liquidity to buffer against future financial constraints. We also illustrate several methodological advantages of our approach over alternative methods in previous studies.

U2 - 10.1093/rfs/hhu066

DO - 10.1093/rfs/hhu066

M3 - Journal article

VL - 27

SP - 3628

EP - 3657

JO - Review of Financial Studies

JF - Review of Financial Studies

SN - 0893-9454

IS - 12

ER -