Investment strategy, dividend policy and financial constraints of the firm

• Main Authors: Lu, Yi-chen, 呂宜真
• Other Authors: Chqu-chen Yang
• Format: Others
• Language: zh-TW
• Published: 1998
• Online Access: http://ndltd.ncl.edu.tw/handle/49214043503323431424

碩士 === 國立臺灣大學 === 財務金融學系研究所 === 86 === If the capital market is imperfect, the asymmetric information and the agency problem will make firms face financing constraints. When a firm has financing constraints, meaning that the firm cannot get external financing easily, it m ay have to retain more earnings in order to supply t its investment needs. If a firm has a good investment opportunity, but has to give it up just because t he firm cannot get enough financing, the underinvestment problem occurs. The f irm whose investment counts more heavily on iFollowing the criteria developed by Fazzari, Hubbard, and Petersen (1988), I also use another methodology --Pro bit Selection Model to do the research. Using probit model, this paper separat es the sample according to their retention ratios, and then uses Q model to ex amine the difference of financing constraints. The difference of the methodo logy used in this paper from other scholars'' one is that, here I separate the sample into some groups according to certain criteria. And then I examine the differences of investment - cash flow sensitivity among groups to find out whe ther there exits any financing constraints differences. I use Probit Selection Model to separate the sample according to their retention ratios, and then us e Q model to examine the difference of financing constraints. The research s ets off from investment theory, uses more robust methodology , and discusses i nformation asymmetry and agency problem by examining the financing constraints of the firm.The empirical result shows that: 1.There exit some differences be tween OLS model and Probit Selection Model, especially in the explanatory vari able-Tobin''s q. Meaning that choosing different methodologies can make differ ent results. So choosing a better one is an important work. Besides, the resul t of examining financial constraints of the firm is similar between the two me thodologies, and there only two out of five years are significantly different between the two groups..2. In the long run, however, firm