Investment-cash flow sensitivity in small and medium sized enterprises at expansion stage
- Martí Pellón, José
- Ferrer, María Alejandra
ISSN: 1989-1725
Año de publicación: 2012
Volumen: 1
Número: 4
Páginas: 68-89
Tipo: Artículo
Otras publicaciones en: Revista Internacional de la Pequeña y Mediana Empresa
Resumen
Most of the controversy about the investment-cash flow sensitivity as a measure of financial constraints concentrates on listed firms. We assume that unlisted growing Small and Medium-Sized Enterprises (SMEs) were subject to financial constraints before a Venture Capital (VC) investment. We analyse the investment-cash flow sensitivity in unlisted Spanish SMEs with and without VC involvement. We find a positive relationship between investment and cash flow in all unlisted firms, which is larger in the subsample of VC-backed firms. Our findings provide an additional justification for the role of VC as a source to fill the financing gap and support the investment-cash flow sensitivity as a measure of the presence of financial constraints.