TY  - JOUR
AU  - Campello,Murillo
AU  - Graham,John
AU  - Harvey,Campbell R.
TI  - The Real Effects of Financial Constraints: Evidence from a Financial Crisis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15552
PY  - 2009
Y2  - December 2009
UR  - http://www.nber.org/papers/w15552
L1  - http://www.nber.org/papers/w15552.pdf
N1  - Author contact info:
Murillo Campello
Johnson Graduate School of Management
Cornell University
114 East Avenue
369 Sage Hall
Ithaca, NY 148531-6201
Tel: 607-255-1282
E-Mail: campello@cornell.edu

John Graham
Duke University
Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708-0120
Tel: 919/660-7857
Fax: 919/660-8038
E-Mail: john.graham@duke.edu

Campbell R. Harvey
Duke University
Fuqua School of Business
Durham, NC 27708-0120
Tel: 919/660-7768
Fax: 919/660-8030
E-Mail: cam.harvey@duke.edu
AB  - We survey 1,050 CFOs in the U.S., Europe, and Asia to assess whether their firms are credit constrained during the global credit crisis of 2008. We study whether corporate spending plans differ conditional on this measure of financial constraint. Our evidence indicates that constrained firms planned deeper cuts in tech spending, employment, and capital spending. Constrained firms also burned through more cash, drew more heavily on lines of credit for fear banks would restrict access in the future, and sold more assets to fund their operations. We also find that the inability to borrow externally causes many firms to bypass attractive investment opportunities, with 86% of constrained U.S. CFOs saying their investment in attractive projects was restricted during the credit crisis of 2008. More than half of the respondents say they will cancel or postpone their planned investment. Our results also hold in Europe and Asia, and in many cases are stronger in those economies.
ER  -