Ding, S. , Guariglla, A. and Knight, J. (2013) Investment and financing constraints in China: does working capital management make a difference? Journal of Banking and Finance, 37(5), pp. 1490-1507. (doi: 10.1016/j.jbankfin.2012.03.025)
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Abstract
We use a panel of over 116,000 Chinese firms of different ownership types over the period 2000-2007 to analyze the linkages between investment in fixed and workingcapital and financingconstraints. We find that those firms characterized by high workingcapital display high sensitivities of investment in workingcapital to cash flow (WKS) and low sensitivities of investment in fixed capital to cash flow (FKS). We then construct and analyze firm-level FKS and WKS measures and find that, despite severe external financingconstraints, those firms with low FKS and high WKS exhibit the highest fixed investment rates. This suggests that an active management of workingcapital may help firms to alleviate the effects of financingconstraints on fixed investment.
Item Type: | Articles |
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Status: | Published |
Refereed: | Yes |
Glasgow Author(s) Enlighten ID: | Ding, Professor Sai |
Authors: | Ding, S., Guariglla, A., and Knight, J. |
College/School: | College of Social Sciences > Adam Smith Business School > Economics |
Journal Name: | Journal of Banking and Finance |
Publisher: | Elsevier Ltd. |
ISSN: | 0378-4266 |
Published Online: | 03 April 2012 |
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