Open AccessFinancial Constraints and Financial Crises: The Case of Portuguese Listed Companies
Author(s) -
Luı́sa Pereira,
Armando Mendes Jorge Nogueira Silva,
Sónia da Silva Faria Nogueira da Maria Silva
Publication year - 2018
Publication title -
international journal of financial research
Language(s) - English
Resource type - Journals
eISSN - 1923-4031
pISSN - 1923-4023
DOI - 10.5430/ijfr.v9n2p64
Subject(s) - finance , panel data , cash flow , financial crisis , business , financial ratio , dividend , index (typography) , sample (material) , financial analysis , portuguese , investment (military) , financial system , economics , econometrics , politics , linguistics , chemistry , philosophy , chromatography , world wide web , computer science , political science , law , macroeconomics
The purpose of this study is to analyze the degree of financial constraints faced by the companies included on the Portuguese Stock General Index when accessing to external financing, especially after the beginning and during the most recent financial crisis that affected the world financial markets from 2007. According to this aim, a longitudinal database is collected from the SABI database and was analyzed under panel data methodology. The final sample is panel data of 430 firm-year observations, related to 43 companies, during the period 2006-2015.In line with previous literature, our results provide evidence that the payout ratio is an efficient measure of the degree of financial constraints; companies that pay out less (or no) dividends display higher sensitivity of the investment to the cash flow. Moreover, we also found that the investment sensitivity to cash flow intensifies immediately after and during the most recent financial crisis.