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Financial Innovation

Table 4 Cash flow sensitivity of external financing: baseline model

From: Financial frictions and the cash flow – external financing sensitivity: evidence from a panel of Pakistani firms

Independent Variables

Dependent Variable:

External_Financing

Cash_Flow

Growth

Size

F − stat. (p-value)

No. of Obs.

Panel A: KZ Index

     

 Constrained firms (CF)

−0.0357

(0.032)

0.0083***

(0.001)

0.0229***

(0.004)

18.04

(0.000)

2890

 Unconstrained firms (UCF)

−0.1092***

(0.002)

0.0180***

(0.007)

0.0304***

(0.011)

25.45

(0.000)

2062

Panel B: Debt to Asset Ratio

 Constrained firms (CF)

−0.0181***

(0.005)

0.0020*

(0.001)

−0.0108***

(0.001)

493.14

(0.000)

2956

 Unconstrained firms (UCF)

−0.1088***

(0.002)

0.0218**

(0.009)

0.0273***

(0.008)

862.63

(0.000)

1996

Panel C: Interest Coverage Ratio

 Constrained firms (CF)

−0.0231

(0.028)

0.0125***

(0.006)

0.0548***

(0.010)

10.22

(0.000)

3920

 Unconstrained firms (UCF)

−0.1819*

(0.093)

0.0378***

(0.010)

0.0252**

(0.011)

38.52

(0.000)

970

  1. Note: Table 4 displays the results of fixed effects model for the baseline regression model (Eq. (1)). The dependent variable is External_Financing, while the independent variables are Cash_Flows, Growth, and Size. Above Table reports three constrained criteria to divide the firms into constrained and unconstrained categories (the KZ Index, the debt to asset ratio, and the interest coverage ratio). We also report the estimated robust standard errors in parentheses. Last two columns show F − statistic along with its p-value and number of observations. We do not report constant term to economize on space. ***, **, and * denote significant at the 1%, 5%, and 10% level of significant, respectively
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