Corporate fixed investment and internal liquidity: Evidence from Greek listed companies

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Abstract

Utilizing a unique panel dataset of 273 listed firms in the Athens Stock Exchange (ASE) we explore the issue of capital market imperfections with respect to access to investment financing. In particular, we investigate the extent to which investment is sensitive to the availability of internal finance. By employing a fixed-effect model, our empirical results indicate a positive association of cash flow and investment, leading to the conclusion of imperfect substitutability between internal and external finance and thus the importance of the former for investment decisions. According to our knowledge, this is the first study covering the specific tremble period of ASE for Greek manufacturing firms.

Keywords: Capital Market Imperfections, Cash Flow, Investment, Panel Data

Authors’ individual contribution: Conceptualization – C.K., P.K., and A.A.; Methodology – C.K.; Investigation – C.K., P.K., and A.A.; Resources – P.K. and A.A.; Writing – C.K. and A.A.; Supervision – P.K. and A.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C33, E22, G31

Received: 08.07.2020
Accepted: 09.09.2020
Published online: 10.09.2020

How to cite this paper: Kallandranis, C., Kalantonis, P., & Aljandali, A. (2020). Corporate fixed investment and internal liquidity: Evidence from Greek listed companies. Corporate Governance and Sustainability Review, 4(2), 68-76. https://doi.org/10.22495/cgsrv4i2p7