Investment and Internal Funds

• Main Authors: Jun-Ya Chiu, 丘潤雅
• Other Authors: Pei-Hsuan Lee
• Format: Others
• Language: en_US
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/81572618134113689242

碩士 === 國立中正大學 === 財務金融研究所 === 99 === This paper investigates the effect of financial conditions on the relationship between investment and internal funds (cash flow) for firms in Taiwan during the period 1989-2009. The results show that while the sensitivity of investment to cash flow is significantly positive in the healthy condition, the intensity decreases in the distressed and turnaround condition. After dividing the sample according to the events a firm experience, there is a declining pattern of sensitivity in distressed firms. Such decreases also appear in turnaround firms based on operating cash flow indicator. Overall, financial ratio indicators produce significant results for identifying the differences in sensitivity among different financial conditions.