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Costly External Finance and Corporate Investment: The Role of Marketable Securities

2024; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.4708554

1556-5068

Bektemir Ysmailov,

State Capitalism and Financial Governance

This paper studies the real effects of corporate financial portfolio allocation decisions. We show that following an external financing supply shock caused by the financial crisis, the investment of a firm that has a higher ex-ante allocation to marketable securities is hampered more than that of a firm higher ex-ante allocation to cash. We show that the timing of the observed change in investment is after the event, indicating a causal effect. Consistent with a supply shock driving the results, we document no such patterns following the events of 9/11 or in the latter part of the financial crisis.