Purpose

The paper examines the differential effect of liquidity constraints on corporate growth using unbalanced panel data for 457 Pakistani firms over the period 2010–2017.

Design/methodology/approach

The study uses the probability of a financial unconstrained index constructed by estimating the endogenous regression model. This approach provides a time-varying measure of financial position for all firm-year observations and takes into account the different degrees of liquidity constraints that a company faces in attaining funds from external markets. It is derived from a multivariate selection equation that simultaneously accounts for all-important features of the underlying company identified in the literature. The cash flow variable has then interacted with various groups of dummy variables for financial constraint, which allows the coefficient of cash flow to vary across firm-year observations in the different liquidity constraint categories. The two-step system-GMM estimator is applied to estimate the main empirical model.

Findings

The results of the study provide evidence of the heterogeneity in firms' growth sensitivity to internal funds, depending on the degree of liquidity constraints. Financing growth through internal funds is found to be essential for both liquidity unconstrained and constrained corporates. However, it is observed that the coefficient of cash flow is greater for firms that do not have access to external financing and it eventually decreases with reductions in the magnitude of liquidity constraints, making the least constrained corporates' growth less responsive to internal funds. The results further indicate that smaller and younger firms show higher responsiveness of growth to internal funds. This finding is mainly attributed to financial market imperfections that make external funding difficult for them.

Practical implications

The results suggest that financially constrained firms should expand their corporate size more than the magnitude of positive income shocks they encounter. The study also suggests important policy implications for liquidity-constrained firms to carefully concentrate on their financing strategies to enhance their growth. By improving the corporate's capacity for production, corporates can achieve a faster effect of a potential positive income shock on their growth.

Originality/value

This paper contributes to the literature by constructing a financial constraint index by running the endogenous regression model. It also contributes by investigating the differential impact of credit constraints on firms' growth in Pakistan and how corporate size and age affect firm growth when financial constraints and investment opportunities are controlled.

中文翻译：

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公司增长-现金流敏感性：财务约束重要吗？

目的

本文使用 2010-2017 年期间 457 家巴基斯坦公司的不平衡面板数据，研究了流动性约束对公司增长的不同影响。

设计/方法/方法

该研究使用通过估计内生回归模型构建的金融无约束指数的概率。这种方法为所有公司年度观察结果提供了一个随时间变化的财务状况度量，并考虑了公司在从外部市场获得资金时面临的不同程度的流动性约束。它源自一个多元选择方程，该方程同时考虑了文献中确定的基础公司的所有重要特征。然后，现金流变量与用于财务约束的各种虚拟变量组相互作用，这使得现金流系数在不同流动性约束类别中的公司年度观察值中有所不同。两步系统-GMM 估计器用于估计主要经验模型。

发现

研究结果提供了公司对内部资金增长敏感性的异质性的证据，这取决于流动性约束的程度。通过内部资金为增长融资对于流动性不受限制和流动性受限的公司来说都是必不可少的。然而，据观察，无法获得外部融资的公司的现金流系数更大，并且最终随着流动性约束程度的减小而减小，从而使受约束最小的公司的增长对内部资金的反应更慢。结果进一步表明，较小和年轻的公司对内部资金的增长反应更高。这一发现主要归因于金融市场的不完善，使他们难以获得外部资金。

实际影响

结果表明，财务受限的公司应该扩大其公司规模，而不是他们遇到的正收入冲击的幅度。该研究还建议对流动性受限的公司谨慎地专注于其融资战略以促进其增长的重要政策影响。通过提高企业的生产能力，企业可以更快地实现潜在的正收入冲击对其增长的影响。

原创性/价值

本文通过运行内生回归模型构建财务约束指数，为文献做出贡献。它还通过调查信贷限制对巴基斯坦公司增长的不同影响以及在财务限制和投资机会得到控制时公司规模和年龄如何影响公司增长做出贡献。