Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship
This paper investigates the presence of financial constraints among firms in Malaysia using firm level panel data analysis. The empirical results based on panel GMM demonstrate that financial constraints are present in the market, which indicate that the firms are unable to access to external forms...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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The UPM Press
2010
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/1742/1/Financial_Constraints_and_Firm_Investment.pdf |
| _version_ | 1825644230655082496 |
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| author | Ismail, Mohd Adib Ibrahim, Mansor Yusoff, Mohammed Zainal, Mohd-Pisal |
| author_facet | Ismail, Mohd Adib Ibrahim, Mansor Yusoff, Mohammed Zainal, Mohd-Pisal |
| author_sort | Ismail, Mohd Adib |
| collection | IIUM |
| description | This paper investigates the presence of financial constraints among firms in Malaysia using firm level panel data analysis. The empirical results based on panel GMM demonstrate that financial constraints are present in the market, which indicate that the firms are unable to access to external forms of financing. In addition, the presence also signifies the presence of asymmetric information problem between the firm and its financer. Thus, the neoclassical investment theory which based on assumption of complete information such that only factor prices and technology determine firm’s desired capital stock is simply rejected. Eventually, their investments are much affected by fluctuations in their cash flows or retained earnings. |
| first_indexed | 2024-03-05T22:29:54Z |
| format | Article |
| id | oai:generic.eprints.org:1742 |
| institution | International Islamic University Malaysia |
| language | English |
| last_indexed | 2024-03-05T22:29:54Z |
| publishDate | 2010 |
| publisher | The UPM Press |
| record_format | dspace |
| spelling | oai:generic.eprints.org:17422021-07-03T15:59:30Z http://irep.iium.edu.my/1742/ Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship Ismail, Mohd Adib Ibrahim, Mansor Yusoff, Mohammed Zainal, Mohd-Pisal HG4001 Financial management. Business finance. Corporation finance. This paper investigates the presence of financial constraints among firms in Malaysia using firm level panel data analysis. The empirical results based on panel GMM demonstrate that financial constraints are present in the market, which indicate that the firms are unable to access to external forms of financing. In addition, the presence also signifies the presence of asymmetric information problem between the firm and its financer. Thus, the neoclassical investment theory which based on assumption of complete information such that only factor prices and technology determine firm’s desired capital stock is simply rejected. Eventually, their investments are much affected by fluctuations in their cash flows or retained earnings. The UPM Press 2010 Article PeerReviewed application/pdf en http://irep.iium.edu.my/1742/1/Financial_Constraints_and_Firm_Investment.pdf Ismail, Mohd Adib and Ibrahim, Mansor and Yusoff, Mohammed and Zainal, Mohd-Pisal (2010) Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship. International Journal of Economics and Management, 4 (1). pp. 29-44. ISSN 1823 - 836X http://www.econ.upm.edu.my/ijem/vol4no1/bab02.pdf |
| spellingShingle | HG4001 Financial management. Business finance. Corporation finance. Ismail, Mohd Adib Ibrahim, Mansor Yusoff, Mohammed Zainal, Mohd-Pisal Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship |
| title | Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship |
| title_full | Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship |
| title_fullStr | Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship |
| title_full_unstemmed | Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship |
| title_short | Financial constraints and firm investment in Malaysia: an investigation of investment-cash flow relationship |
| title_sort | financial constraints and firm investment in malaysia an investigation of investment cash flow relationship |
| topic | HG4001 Financial management. Business finance. Corporation finance. |
| url | http://irep.iium.edu.my/1742/1/Financial_Constraints_and_Firm_Investment.pdf |
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