The Impact of Real Options on Investment-Cash Flow Sensitivity

• Main Authors: BUI, THI-MAI, 裴氏梅
• Other Authors: CHAN, CHIA-CHANG
• Format: Others
• Language: en_US
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/7nef3z

碩士 === 東海大學 === 財務金融學系 === 107 === Although Investment-Cash Flow Sensitivity (ICFS) is well documented in the corporate finance literature, results of this relationship are controversial and most of the previous papers based on cash flow viewpoint. Using a sample of firms listed in Taiwan Stock Exchange over the period 2001-2017, this paper investigates the impact of real options on ICFS. We argue that the relationship between investment and internal cash flow has to be considered from both aspects: Cash flow and investment. After examining our sample, we have some interesting results. First, real options increase the sensitivity of investment on internal cash flow. Second, under controlling financial constraints (From the cash flow aspect), real options (From the investment aspect) is also an important explanatory variable. Third, real options can expand the effect of financial constraints on Investment-Cash flow sensitivity.