Financing Frictions and the Substitution between Internal and External Funds

被引:120
作者
Almeida, Heitor [1 ]
Campello, Murillo [1 ]
机构
[1] Univ Illinois, Coll Business, Champaign, IL 61820 USA
关键词
CAPITAL STRUCTURE CHOICE; CORPORATE-INVESTMENT; MONETARY-POLICY; SUNK COSTS; CASH FLOW; CONSTRAINTS; MARKET; FIRMS; DEBT; BEHAVIOR;
D O I
10.1017/S0022109010000177
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
Ample evidence points to a negative relation between internal funds (profitability) and the demand for external funds (debt issuance). This relation has been interpreted as evidence supporting the pecking order theory. We show, however, that the negative effect of internal funds on the demand for external financing is concentrated among firms that are least likely to face high external financing costs (firms that distribute large amounts of dividends, that are large, and whose debt is rated). For firms on the other end of the spectrum (low payout, small, and unrated), external financing is insensitive to internal funds. These cross-firm differences hold separately for debt and equity, and they are magnified in the aftermath of macroeconomic movements that tighten financing constraints. We argue that the greater complementarity between internal funds and external financing for constrained firms is a consequence of the interdependence of their financing and investment decisions.
引用
收藏
页码:589 / 622
页数:34
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