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Do financing constraints hinder corporate fixed investment? Evidence from the Amman stock exchange

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  • Mohammad A. Khataybeh

Abstract

This research provides new evidence on financing constraints on corporate fixed investment by emphasizing the role of cash holdings as a precautionary source of funds. Applying GMM estimates to a sample of 106 Jordanian firms, the results suggest that firms follow trade-off theory in financing their investments but are financially constrained. The coefficient of the cash holdings variable appears to be negative in the fixed-investment regression, suggesting that when firms face financing shocks, they draw upon their precautionary cash reserves to smooth the path of their expenditure on fixed assets.

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  • Mohammad A. Khataybeh, 2021. "Do financing constraints hinder corporate fixed investment? Evidence from the Amman stock exchange," Cogent Business & Management, Taylor & Francis Journals, vol. 8(1), pages 1910161-191, January.
    • Handle: RePEc:taf:oabmxx:v:8:y:2021:i:1:p:1910161
    DOI: 10.1080/23311975.2021.1910161
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    Cited by:

    1. Safaa Alsmadi & Ahmad Alkhataybeh & Mohammad Ziad Shakhatreh, 2022. "Corporate cash holdings and disclosure violations: an empirical investigation of Jordanian listed companies," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 13(3), pages 568-580, January.

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