Table 1 Variable definitions
Variable | Expected Signs | Definition | |
|---|---|---|---|
Constrained firms | Unconstrained firms | ||
Dependent Variable | |||
External_Financing | External financing is the ratio of change in long-term debt plus change in shareholders’ equity to total assets. | ||
Independent Variables | |||
Cash_Flow | -ve | -ve | The net profit before tax plus depreciation for the year divided by total assets. |
Control Variables | |||
Growth | -ve/+ve | +ve | Annual percentage change in total sales normalized by consumer price index. |
Size | -ve/+ve | +ve | Natural logarithm of book value of sales. |
Cash | +ve | -ve/+ve | Sum of cash and liquid securities divided by total assets |
Inventory | -ve/+ve | -ve | The ratio of inventories to total assets. |
PPE (Plant, Property, and Equipment) | -ve/+ve | -ve | The fixed assets divided by total assets. |
Debt/Equity | -ve | -ve/+ve | Total liabilities divided by total equity. |