The objectives of the study are listed. The sample and research design are stated. Data is collected for all variables for all countries for ten financial years. Each country is analyzed for each variable separately using time series analysis. The interpretation for each measure of performance is explained. The limitations of the study are listed.
Economic liberalization and globalization have brought about a new and competitive environment for the common and small investors who are willing to participate in the equity of the corporate sector in our country. Understanding the firm's investment decisions under imperfect market conditions is one of the central issues of the financial economics. Studying firm's investment in such environment can provide insight into the dynamics of its growth as a function of internal and external financial sources. Fazzari et al. (1988) argue that in the presence of financing constraints the firm's investment vary not only with the availability of the profitable investment projects, but also with the internal funds. Consequently, the severity of the financing constraints is proposed to be measured by the magnitude of the cash flow sensitivity of investment.
In this paper, the authors propose an alternative perspective to investigate the relationship between financing conditions and the sensitivity measure. First, they argue that in the real world it is hard to identify a group of firms in the absence of the financing constraints. Kaplan and Zingales (1997) also argue that just considering the external relative to the internal costs of financing we could hardly find any unconstrained firm. The paper concludes by stating that financing conditions may determine investment and growth of the European Firms.
- Firm's investment under financing constraints - A euro area investigation
By Rozlia Pl, EuropeanUniversity Viadrina and Roman Kozhan, The University of Warwick, June 2006
Methodology and Data
The sample for the research is based on the excel sheet provided. The research relies on the secondary data for analysis and interpretation. It is a descriptive study.
ANALYTICAL TOOLS AND METHODS:
The research performs a trend analysis in each period for each country based on the selected variables. This is followed by a time series analysis which covers ten years of data for each country and the interpretations are given.
The variables selected for analysis are
The various ways of dispersing the money by a company is called investments. Investments occur as a result of saving and improving business performance and profits.
This includes both fixed and variable assets include Land and building, Plant, Machinery, cash in hand etc.
This indicates the cost structure of the company.
The borrowings of a company are termed as debt.
The shareholders funds are defined as equity
Earnings per share
The earnings received as a result of one