Investment–cash flow sensitivity and investor protection

نویسندگان

چکیده

We examine the role of country-level legal investor protection (i.e., shareholder and creditor protection) on firm investment–cash flow sensitivity (ICFS). Using underexplored research data across 21 countries working with a conservative empirical design, we extend prior literature relation between ICFS provide new evidence how these attributes interact to explain firm's ICFS. find that either strong minority shareholders or creditors reduces investment internal cash flow. However, in levels both protection, increases. Our results remain robust after controlling for several alternative explanations. The support argument overregulation arises when policymakers increase at lead firms avoid external sources finance, hampering investment. findings suggest face regulatory trade-off such increasing (either enhances financial markets efficiency, but excessive regulation can indeed inefficiencies.

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ژورنال

عنوان ژورنال: Journal of Business Finance & Accounting

سال: 2022

ISSN: ['1468-5957', '0306-686X']

DOI: https://doi.org/10.1111/jbfa.12645