Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289518 
Year of Publication: 
2023
Citation: 
[Journal:] Schmalenbach Journal of Business Research (SBUR) [ISSN:] 2366-6153 [Volume:] 75 [Issue:] 4 [Year:] 2023 [Pages:] 483-518
Publisher: 
Springer, Heidelberg
Abstract: 
In order to identify the economic driver of negative investment-cash flow sensitivities (ICFS), we derive testable predictions from extending a theoretical investment model with endogenous financing costs ("revenue effect") and contrast them with the corporate life-cycle hypothesis. We find that firms with (i) lower levels of long-term debt display stronger negative ICFS, and (ii) firms with more risky revenues invest more, which contradicts the predictions of the revenue effect. At the same time firms with strongly negative ICFS are (iii) smaller, (iv) younger and (v) have higher growth opportunities, which is consistent with the life-cycle hypothesis.
Subjects: 
Corporate Life-Cycle
Cost-Revenue Effect
Investment-Cash Flow Sensitivity
Nonlinearities
JEL: 
G31
G32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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