TY  - JOUR
AU  - Devereux,Michael
AU  - Schiantarelli,Fabio
TI  - Investment, Finacial Factors and Cash Flow:  Evidence From UK Panel Data
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3116
PY  - 1989
Y2  - September 1989
UR  - http://www.nber.org/papers/w3116
L1  - http://www.nber.org/papers/w3116.pdf
N1  - Author contact info:
Michael B. Devereux
Department of Economics
University of British Columbia
997-1873 East Mall
Vancouver, BC V6T 1Z1
CANADA
Tel: 604/822-2542
Fax: 604/822-5915
E-Mail: mbdevereux@gmail.com

Fabio Schiantarelli
Department of Economics
Boston College
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: 617-5524512
Fax: 617-5522308
E-Mail: schianta@bc.edu
M1  - published as Michael Devereux, Fabio Schiantarelli. "Investment, Financial Factors, and Cash Flow: Evidence from U.K. Panel Data," in R. Glenn Hubbard, editor, "Asymmetric Information, Corporate Finance, and Investment" University of Chicago Press, 1990 (1990)

AB  - In this paper we provide some econometric evidence on the impact of financial factors like cash flow, debt and stock measures of liquidity on the investment decisions of U. K. firms. These variables are introduced via an extension of the Q model of investment which explicitly includes agency/financial distress costs. We discuss if the significance of cash flow may be due to the fact that it proxies for output or because it is a better measure of market fundamentals than Q. Moreover we investigate if the effect of financial factors varies across different types of firms, according to size, age, and type of industry (growing and declining). We analyze the determinants of the magnitude of the cash flow effect and explain why caution must be exercised in attributing inter-firm differences only to differences in the importance of agency or financial distress  costs. 
ER  -