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Corporate investment: Financial Market Imperfection
Finance & Accounting
Pages 22 (5522 words)
Student Names Corporate Investment Corporate Investment, Financial Market Imperfections Study Level Date Table of Contents 1. Introduction 1.1. Brief Overview of the Topic 1.2. Structure of the work 2. Literature Review 2.1. The main Results of the Topic 2.2.
manufacturing companies from 1970s to 1990s. It explores the variation in the sensitivity in line with certain factors affecting the capital market including institutional ownership, flows of funds, analytical history and the amendments against takeover. These are mechanisms behind corporate authority. Studies have revealed a constant fall in the sensitivity of cash flow for a number of years, especially after the 1970s. The issue of imperfection of the capital market controls the fall in the level of cash-flow sensitivity for a specific period of time. Flow of funds reduces the sensitivity of cash flow of all companies. 1. Introduction 1.1. Brief Overview of the Topic In the middle of perfect capital market, the decision on a company’s investment ought not to be altered by the firm’s financing positions. The imperfection on capital market nevertheless, brings in a barrier the costs of external cash flow and the internal funds. Companies that are facing greater levels of imperfection in information exhibits wider barriers hence they possess more sensitive investment that affect decisions of investment and financing. This study explores evidence showing that the investments firms that are financially constrained are very sensitive to the amount of internal funds that the firm can access. ...
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