• Journal of the Korea Academia-Industrial cooperation Society
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• v.12 no.4
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• pp.1654-1662
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• 2011

This paper investigates how does cash holdings have effect on investment-cash flow sensitivity in korea firms over the period 1981-2009. According to $\"{O}$.Arslan et al.(2006), I expect that financially constrained firms have more cash holdings. and financially constrained cash-rich firms are likely to have less investment-cash flow sensitivity especially in the financial crisis period. Using financial constraint classification variables(firm size, dividend, cash holdings), we divide whole sample firms into financially constrained firms and financially unconstrained firms, and then I compare investment-cash flow sensitivity in pre-financial crisis(1981-1996), financial crisis(1997-1998) and after-financial crisis(1999-2009) period. This paper's findings are as follows: First, under no financial constraint classification conditions, cash-poor firms exhibit greater investment-cash flow sensitivity than cash-rich firms do during 1981-2009 period except financial crisis period. These findings support the hypothesis that firms have more cash holdings less investment-cash flow sensitivity except in financial crisis period. In financial crisis period, cash holdings have no effect on investment-cash flow sensitivity. Second, this paper findings are somewhat different as $\"{O}$.Arslan et al.(2006)'s. Under the financial constraint classification conditions, financially unconstrained firms have more investment-cash flow sensitivity rather than constrained firms have. The reason is that both dividend and firm size are not a complete classification criteria variables. And there exists other possible determinants of investment-cash flow sensitivity. Finally, this paper find that there are common determinants of corporate cash holdings in all periods. This paper suggests that cash flow and market to book ratio are positive determinants of corporate cash holdings but short-term debt, investment and firm size are negative determinants of corporate cash holdings.

• Asian Journal of Business Environment
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• v.9 no.1
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• pp.21-28
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• 2019

Purpose - The purpose of this paper is to investigate the relationship between corporate social responsibility disclosure (CSRD) and investment-cash flow sensitivity, which is a surrogate for financing constraints. Research design, data, and methodology - Taking China's A-share listed companies between 2009 and 2016 as a sample, this paper empirically tests the relationship between CSRD and investment-cash flow sensitivity by Panel VAR model. By introducing the orthogonal impulse response function, this paper distinguishes the fundamental factors and financial ones that affect corporate investment behavior. Results - Findings indicate that: (1) investment-cash flow sensitivity of firms with low level of CSRD is significantly lower than that of firms with high level of CSRD; (2) the orthogonal impulse response of corporate investment to cash flow in firms with high level of CSRD is significantly different from zero, but it is not significant in firms with low level of CSRD; (3) for firms with low level of CSRD, 0.7% of corporate investment volatility can be explained by the change in cash flow, which is lower than that of firms with high level of CSRD (1.1%). Conclusions - Corporations disclosing more and higher quality CSRD are often those faced with financing constraints. Voluntary disclosure can help them alleviate information asymmetry and financing constraints.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.14 no.2
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• pp.674-680
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• 2013

This paper investigates the impact of liquidity constraints on investment expenditures of family and non-family firms. We analyze the ownership structure of family firms to determine whether family control alleviates or exacerbates investment-cash flow sensitivity in domestic firms. To examine the impact of liquidity constraints on investment expenditures of family and non-family firms, we used a financial data of 644 Korea Exchange traded companies over the 2000 - 2010 period. We estimated a time-series and cross-sectional regression model, using samples of family firms and non-family firms. The results show that cash flow is not associated with investment expenditure in family firms, whereas cash flow has a positive impact on investment in non-family firms. Our results show that lower or no investment-cash flow sensitivities in family-controlled firms are mainly attributable to lower agency costs through strong monitoring activities of family members. Higher investment-cash flow sensitivities are observed in non-family firms with more agency problems. This suggests that investment-cash flow sensitivities would be useful measures of liquidity constraints.

• Economic Analysis
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• v.17 no.2
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• pp.56-89
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• 2011

The sensitivity of investment with respect to cash flow is positive in imperfect financial markets. Using a switching regression model, cash flow sensitivity of investments in chaebol firms and large firms appears to be higher. Also, investments are found to be more responsive to cash flow during monetary contraction periods. These findings imply that monetary policy works through a credit channel. Furthermore, it appears that monetary policy exerts distributional effects as well as aggregate effects on that firms are unevenly affected by monetary changes.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.10
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• pp.305-315
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• 2021

This study aims to investigate the relationship between the difference in gender of top executives and corporate investment. In addition, this study also extends to how the sensitivity of investment to cash flow varies with the gender of leaders. Finally, the effect of the gender of leaders on firm investment is also tested across firm types (state firms vs. private firms and high-growth firms vs. low-growth firms). Based on the dataset of Vietnamese listed firms over 2007-2017, the fixed-effect model is used to test the hypotheses. The results show that women as chairs of the board tend to lower corporate investment, whereas the gender of CEOs (Chief Executive Officers) does not influence the investment level. Moreover, top female executives are associated with a decrease in the sensitivity of investment to cash flow. These regression results also show that top female executives only have an impact on the rate of investment in private and low-growth firms. The findings of this study are useful for the board of directors in selecting a chairperson in line with the firm's strategies. Furthermore, the findings of this study are also meaningful for policymakers who should monitor the separate role of the CEO and chair of the board in a company.

• Journal of Distribution Science
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• v.13 no.3
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• pp.69-77
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• 2015

Purpose - The purpose of this study is to examine whether the cash policies of retail firms listed on Korean stock markets are consistent with the evidence provided in the study of Almeida et al. (2004). Liquidity management is an important issue for financially constrained firms relative to financially unconstrained firms. Because there are few sources of external funding, the optimal liquidity policies of financially constrained firms should reflect their own earnings or cash inflows to create opportunities for current and future real investments. According to this simple idea, we estimate the sensitivity of cash to cash flows and simply check whether the estimated sensitivity to cash flows of the cash retained by constrained retail firms is greater than that of the cash retained by unconstrained retail firms. Through this work, we aim to explain why the cash policies of the retail firms listed on the Korean stock markets differ from those of listed manufacturing enterprises. Research design, data, and methodology - To explain a firm's cash holdings, we use only three explanatory variables: earnings before interest and taxes (EBIT), Tobin's q, and size. All the variables are defined as the value of the numerator divided by aggregate assets. Thanks to this definition, it is possible to treat all the sample firms as a single large firm. The sample financial data for this study are collected from the retail enterprises listed on the KOSPI and KOSDAQ markets from 1991 to 2013. We can obtain these data from WISEfn, the financial information company. This study's methodology has its origin in Keynes's simple idea of precautionary liquidity demand: When a firm faces financial constraints, cash savings from earnings or cash inflows become important from the corporate finance perspective. Following this simple idea, Almeida et al. (2004) developed their theoretical model and found empirical evidence that the sensitivity of cash to cash flows varies systematically according to different types of financing frictions. To find more empirical evidence for this idea, we examined the cash flow sensitivity of the cash held by Korean retail firms. Results - Through several robustness tests, we empirically showed that financially constrained Korean retail firms display significant positive propensity to save cash from earnings before interest and taxes, while the estimated cash flow sensitivity of the cash held by unconstrained retail firms is not significant. Despite the relatively low earnings of retail firms, their sensitivity is three times greater than that of manufacturing enterprises. This implies that Korean retail firms have greater intentions of facilitating future investments rather than current investments. Conclusions - The characteristics of the cash policies of Korean retail firms differ from those of manufacturing firms. This contrast may be attributable to industry-oriented policy planning, regulations, and institutional differences. However, the industrial policymakers should observe signals of the long-term growth options of retail firms based on their high propensity to save from their cash inflows.

• 산업혁신연구
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• v.34 no.2
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• pp.1-30
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• 2018

This study analyzes empirically the effects of financial cash flows and operating cash flows on R&D investment of firms listed on Korea Exchange. The main results of this study can be summarized as follows. Financial cash flows have a larger positive effect on R&D investment than operating cash flows do, implying that firms use more financial cash flows than operating cash flows for financing R&D investment that has information asymmetry problems. This results suggest that improving financial cash flows enhance R&D investment by increasing the predictability of cash flows and decreasing the volatility of cash flows by decreasing financial leverage. Financially constrained firms use much more financial cash flows than operating cash flows for financing R&D investment that has information asymmetry problems. Financial constraints are measured by proxy variables such as firm size and Hadlock and Pierce's(2010) HP index. This results suggest that improving financial cash flows is more important than operating cash flows for financing R&D investment of financially constrained firms. Moreover, firms use more financial cash flows for financing asset-counted R&D investment than for financing cost-counted R&D investment. Asset-counted R&D investment is counted in intangible assets on the Statement of Financial Position, whereas cost-counted R&D investment is counted in cost on the Income Statement. In conclusion, even after controlling for adjustment costs associated with R&D investment and the endogeneity problems of cash flow variables as well as other characteristic variables, the results show that financially constrained firms use much more financial cash flows than operating cash flows for financing R&D investment that has information asymmetry problems. Overall, this finding suggests that information asymmetry and financial constraints problems are likely to co-exist in financing R&D investment. This finding also contributes to the extant literature that examines investment-cash flow sensitivity by showing that financial cash flows have a larger effect on R&D investment rather than operating cash flows.

• Journal of Electrical Engineering and Technology
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• v.9 no.3
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• pp.812-819
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• 2014

The proposed technical work attempts to compare the two key technologies of power distribution, i.e. direct current (DC) and alternating current (AC) in a fiscal manner. The DC versus AC debate has been around since the earliest days of electric power. Here, at least four types of a low voltage DC (LVDC) distribution are examined as an alternative to the existing medium voltage AC (MVAC) distribution with an economic assessment technique for a project investment. Besides, the sensitivity analysis will be incorporated in the overall economic analysis model to cover uncertainties of the input data. A detailed feasibility study indicates that many of the common benefits claimed for an LVDC distribution will continue to grow more profoundly as it is foreseen to arise with the increased integration of renewable energy sources and the proliferation of energy storage associated with the enhanced utilization of uninterruptible power supply (UPS) systems.

• Journal of Agricultural Extension & Community Development
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• v.28 no.4
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• pp.167-174
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• 2021

This study analyzed the feasibility of custom work service to deal with the imbalance of farm labor supply due to population aging. The economic feasibility analysis is based on the case of Bonghwang-myeon in Naju-si, where the majority of farm work is entrusted to local agricultural cooperative. To assess the project profitability and economic feasibility based on the projected cash flow for the next ten years, Return On Investment (ROI), Net Present Value (NPV), and Internal Rate of Return (IRR) of the projects were calculated. The results showed that ROI is estimated at 13.7%, and NPV and IRR are KRW 1,504,932,000 and 15.6%, respectively, with a discount rate of 4.5%, indicating a good enough profitability. Furthermore, a sensitivity analysis with government support as part of an assumption showed that without the support, NPV turns negative, implying that the project is not profitable, and that government support for at least 30% of the cost is needed to secure the economic feasibility of a project. Hence, to promote agricultural work entrustment, it is necessary for the government to partly support the agricultural machinery and facility costs, which require a considerable amount of initial investment.

• Korean Journal of Construction Engineering and Management
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• v.7 no.1 s.29
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• pp.168-175
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• 2006

Since the partly changed 'Private Investment Act for Social Infrastructure Projects' set forth in January 2005, the number of BTL(Build-Transfer-Lease) projects offered to the market has rapidly increased. The scope of BTL projects offered covers not only legally defined facilities but several facilities for the private schools. A BTL project, by definition, is a way of project management that includes the entire process of development such as planning, design, construction and operation over the period of 20-30 years. As a result, various types of risk may happen at each stage of the project and it is extremely important to efficiently control the sensitive factors that affect the risk profiles of the project. The examples of the sensitive factors are construction cost, interest rate, discount rate, lease amount, rental fee, O&M cost and so on. This study examines the characteristics of these sensitivity factors, analyzes their impact on the project feasibility and suggests the alternatives to manage them efficiently.