Cash flow-investment relationship in Malaysia: a panel threshold regression analysis
The objective of this article is to analyse the relationship pattern of cash flow-investment among low and high debt firms. To investigate the issue, we employed Hansen’s (1999) threshold method of non-dynamic panel data. In this article, the firm debt ratio was used as threshold variable. A bala...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2015
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| Online Access: | http://journalarticle.ukm.my/9607/1/12179-33189-1-SM.pdf |
| _version_ | 1796931029899935744 |
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| author | Mohd Adib Ismail, Mawar Murni Yunus, |
| author_facet | Mohd Adib Ismail, Mawar Murni Yunus, |
| author_sort | Mohd Adib Ismail, |
| collection | UKM |
| description | The objective of this article is to analyse the relationship pattern of cash flow-investment
among low and high debt firms. To investigate the issue, we employed Hansen’s (1999)
threshold method of non-dynamic panel data. In this article, the firm debt ratio was used as
threshold variable. A balanced panel data of companies listed on Bursa Malaysia,
comprising of 234 companies for a period from 2004 to 2010, was utilized in this study. The
results showed that debt ratio has a significant role at explaining the cash flow-investment
relationship among firms. In particular, the results showed that low debt firms exhibit
significant support to the financial constraints hypothesis, while high debt firms demonstrate
support to the free-cash flow hypothesis. This finding explains why the cash flow-investment
relationship of certain firms is negative, while other firms are positive. It also signifies the
inability of constrained firms to access to external financing; thus, leading the firms to
significantly rely on their internal financings. |
| first_indexed | 2024-03-06T04:12:05Z |
| format | Article |
| id | ukm.eprints-9607 |
| institution | Universiti Kebangsaan Malaysia |
| language | English |
| last_indexed | 2024-03-06T04:12:05Z |
| publishDate | 2015 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| record_format | dspace |
| spelling | ukm.eprints-96072016-12-14T06:50:26Z http://journalarticle.ukm.my/9607/ Cash flow-investment relationship in Malaysia: a panel threshold regression analysis Mohd Adib Ismail, Mawar Murni Yunus, The objective of this article is to analyse the relationship pattern of cash flow-investment among low and high debt firms. To investigate the issue, we employed Hansen’s (1999) threshold method of non-dynamic panel data. In this article, the firm debt ratio was used as threshold variable. A balanced panel data of companies listed on Bursa Malaysia, comprising of 234 companies for a period from 2004 to 2010, was utilized in this study. The results showed that debt ratio has a significant role at explaining the cash flow-investment relationship among firms. In particular, the results showed that low debt firms exhibit significant support to the financial constraints hypothesis, while high debt firms demonstrate support to the free-cash flow hypothesis. This finding explains why the cash flow-investment relationship of certain firms is negative, while other firms are positive. It also signifies the inability of constrained firms to access to external financing; thus, leading the firms to significantly rely on their internal financings. Penerbit Universiti Kebangsaan Malaysia 2015 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/9607/1/12179-33189-1-SM.pdf Mohd Adib Ismail, and Mawar Murni Yunus, (2015) Cash flow-investment relationship in Malaysia: a panel threshold regression analysis. Jurnal Pengurusan, 45 . pp. 1-17. ISSN 0127-2713 http://ejournal.ukm.my/pengurusan/issue/view/749 |
| spellingShingle | Mohd Adib Ismail, Mawar Murni Yunus, Cash flow-investment relationship in Malaysia: a panel threshold regression analysis |
| title | Cash flow-investment relationship in Malaysia: a panel threshold
regression analysis |
| title_full | Cash flow-investment relationship in Malaysia: a panel threshold
regression analysis |
| title_fullStr | Cash flow-investment relationship in Malaysia: a panel threshold
regression analysis |
| title_full_unstemmed | Cash flow-investment relationship in Malaysia: a panel threshold
regression analysis |
| title_short | Cash flow-investment relationship in Malaysia: a panel threshold
regression analysis |
| title_sort | cash flow investment relationship in malaysia a panel threshold regression analysis |
| url | http://journalarticle.ukm.my/9607/1/12179-33189-1-SM.pdf |
| work_keys_str_mv | AT mohdadibismail cashflowinvestmentrelationshipinmalaysiaapanelthresholdregressionanalysis AT mawarmurniyunus cashflowinvestmentrelationshipinmalaysiaapanelthresholdregressionanalysis |