search query: @indexterm Financial management / total: 951
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| Author: | Campello, M. Graham, J.R. Harvey, C.R. |
| Title: | The real effects of financial constraints: Evidence from a financial crisis |
| Journal: | Journal of Financial Economics
2010 : SEP, VOL. 97:3, p. 470-487 |
| Index terms: | financial crises investments liquidity companies financial management Asia Europe USA |
| Language: | eng |
| Abstract: | In this paper, 1,050 Chief Financial Officers (CFOs) in the U.S., Europe, and Asia are surveyed to directly assess whether their firms are credit constrained (henceforth as: cnstrd.) during the 2008 global financial crisis (here as: 2008-crs). It is explored whether corporate spending plans differ conditional on this survey-based measure of financial constraint. It is indicated that cnstrd. firms planned deeper cuts in employment, technology, and capital spending. Cnstrd. firms also burned through more cash, drew more strongly on lines of credit for fear of banks restricting access in the future, and sold more assets to fund their operations. In addition, it is also found that the inability to borrow externally caused many firms to omit attractive investment opportunities, with 86 percent of constrained U.S. CFOs saying their investment being restricted during the 2008-crs. More than half of the respondents had postponed or cancelled planned investments. These results also hold in Asia and Europe, in many cases being stronger in those economies. |
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