Is the cash flow sensitivity of cash asymmetric? African evidence

Michael Machokoto, Geofry Areneke

Research output: Contribution to JournalArticle

Abstract

We examine whether the cash flow sensitivity of cash is asymmetric using a sample of 745 firms from understudied African countries over the period from 2000–2015. We hypothesise and find significant asymmetry in the cash flow sensitivity of cash conditional on cash flow and financial constraints. Firms with positive cash flow save while those with negative cash flow dissave. These differences are more apparent in the presence of financial constraints. Our results affirm the asymmetry in the cash flow sensitivity of cash and highlight the severity of the impact of financial constraints on corporate decisions in emerging markets.
Original languageEnglish
Pages (from-to)101440
JournalFinance Research Letters
Early online date23 Jan 2020
DOIs
Publication statusE-pub ahead of print - 23 Jan 2020

Keywords

  • Asymmetry
  • Financial constraints
  • The cash flow sensitivity of cash

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