Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/10892
Title: Cash-flow sensitivities and the allocation of internal cash flow
Authors: Chang, X
Dasgupta, S
Wong, G
Yao, J
Issue Date: 2014
Publisher: Oxford University Press
Source: Review of financial studies, 2014, v. 27, no. 12, p. 3628-3657 How to cite?
Journal: Review of Financial Studies 
Abstract: We study how firms allocate cash flow by estimating the cash-flow sensitivities of various uses of cash flow. We decompose cash flow into a transitory and a permanent component and focus on the allocation of the transitory component, which by construction contains little information about future growth opportunities. We find that more financially constrained firms allocate more transitory cash flow to cash savings and direct less toward investment than do less constrained firms, consistent with constrained firms accumulating liquidity to buffer against future financial constraints. We also illustrate several methodological advantages of our approach over alternative methods in previous studies.
URI: http://hdl.handle.net/10397/10892
ISSN: 0893-9454
DOI: 10.1093/rfs/hhu066
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