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School of International Business, Beijing Foreign Studies University, Beijing 100089, China;
Abstract
We conduct an empirical study on Chinese listed firms investment-cash flow sensitivities in different stages of the macroeconomic cycle during 1993–2004, and find that macro-economy has a significant effect on investment-cash flow sensitivities. When economic slowdown occurred between 1998 and 2001, sample firms reduced working capital substantially to maintain some necessary investment level of fixed assets, that is, firms stabilized fixed assets investment by adjusting working capital. However, the sensitivity coefficients of fixed assets investment to cash or sales revenue were not systematically higher in the depressed stage than in the booming stage.
Cite this article
YING Weiwei. Does macro-economy have any effect on firm investment-cash flow sensitivities? —An empirical study based on panel data, 1993–2004. Front. Econ. China, 2007, 2(3): 388‒403 https://doi.org/10.1007/s11459-007-0020-2
