Abstract
Purpose
The literature on financing constraints in emerging markets is still under-researched and is often described as a “black box.” This study aims to shed light on this underexplored area for emerging economies. Specifically, it attempts to understand the phenomenon of financing constraints through a systematic review and bibliometric analysis.
Design/methodology/approach
A systematic literature review and bibliometric analysis are used to identify the main features of investment-cash flow sensitivity and the financing constraints hypothesis in the context of emerging markets.
Findings
Financing constraints and investment-cash flow sensitivity in emerging markets should be analyzed in light of capital market imperfections, financial liberalization and macroeconomic conditions.
Research limitations/implications
This study is expected to serve as a valuable resource for researchers interested in the financing challenges faced by firms in emerging economies.
Originality/value
To the best of the author’s knowledge, this is the first comprehensive systematic and bibliometric literature review that examines the distinct characteristics of the financing constraints hypothesis on investment decisions in emerging markets.
Keywords
Citation
Doruk, Ö.T. (2024), "The investment-cash flow sensitivity and the financing constraints hypothesis for emerging markets: a bibliometric and systematic literature review", Journal of Business and Socio-economic Development, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JBSED-10-2023-0085
Publisher
:Emerald Publishing Limited
Copyright © 2024, Ömer Tuğsal Doruk
License
Published in Journal of Business and Socio-economic Development. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
1. Introduction
Following the seminal work of Fazzari et al. (1988) (hereafter FHP), investment-cash flow sensitivity is usually referred to as the “financing constraints” problem for a firm. The classical regression model of financing constraints, based on Fazzari et al. (1988), is expressed as follows:
The main purpose of this literature review and bibliographic analysis is to provide a “how to do” guide for researchers interested in studying investment-cash flow sensitivity in emerging markets, rather than simply referencing seminal papers and drawing general conclusions as is typical in traditional literature reviews. By focusing on the specific characteristics of emerging markets, this paper aims to serve as a guide for future research in the field. Additionally, decision-makers and policymakers can use the insights on the investment-cash flow sensitivity, considering the unique characteristics found in emerging markets.
This paper is organized as follows. The systematic literature review is provided in Section 2. Section 3 presents the results of the bibliometric analysis. Section 4 provides the discussion and explores the research gaps identified from both the systematic review and the bibliometric analysis. Finally, Section 5 provides the conclusion.
2. Systematic literature review
This study first relies on a systematic literature review to analyze the financing constraints hypothesis in emerging markets. The research follows the methodology outlined by Kumar et al. (2020), Rosado-Serrano et al. (2018), and Billore and Anisimova (2021).
2.1 The search process
The search process utilized many databases, including Google Scholar, Emerald Insight, Science Direct, Taylor and Francis, Wiley, Oxford Journals, and Cambridge Core. A total of 941 papers on financing constraints were identified via Google Scholar. However, many of these papers were excluded as they focused on developed economies or addressed financing constraints from unrelated angles (e.g. R&D, exporting, or specific firm characteristics). Morgan Stanley Capital International (MSCI) classifications were used to determine which countries are considered emerging markets. Only papers published in journals indexed by the Web of Science (WoS) were considered, reducing the final number of papers related to emerging markets to 55 [1].
2.2 The inclusion criteria for the literature
The inclusion criteria for this review included search queries such as “financing constraints and investment”, “financial constraints and investment”, and “investment cash flow sensitivity”. Papers from the Web of Science were used and only studies that provided sufficient details on their methodological approach and research design parameters were included (see Billore and Anisimova, 2021). To ensure comparability, studies based on a micro-level (or firm-level) datasets were selected, while those from the financial or manufacturing sectors were excluded. The period spans from 1990 to 2021, and the study follows the PRISMA guideline (see Figure A1 in the Appendix).
2.3 Review structure
This section uses Callahan’s (2014) 4W approach to structure the systematic literature review. Tables in this section are organized according to this approach.
2.3.1 What do we know about the financing constraints hypothesis in emerging markets?
Table 1 provides a summary of studies that examine the financing constraints hypothesis in emerging markets, listing relevant studies, the journal in which they were published, and the number of citations. The studies are heterogeneous in terms of the number of citations (see Table 1). The following section examines the countries that the studies focus on.
2.3.2 Where is the research happening?
Table 1 shows the geographic distribution of studies in the existing literature, showing that most research on financing constraints in emerging countries is concentrated in India and China. These countries are the most active countries in research on this topic.
2.3.3 How was the research conducted?
Table 2 shows the methodologies used in the current literature. Modeling the financing constraints hypothesis poses empirical challenges. Many firm-level analyses rely on financial statements, which can lead to simultaneity bias, where two-way causality may exist between investment and its determinants. Usually, lags of investment variables are often used as regressors to capture the inertia effect in econometric models. However, in addition to the simultaneity bias, the lagged investment variable may be correlated with the error term, a phenomenon referred to as “Nickell’s bias” (see Nickell, 1981), which contributes to the endogeneity problem in the econometric model. To address this, 27 of the 55 papers in the existing literature used the generalized method of moments (GMM) to address endogeneity and simultaneity biases.
2.3.4 “Why should academicians, and policymakers know more about investment-cash flow sensitivity and financing constraints?”
As financial development and/or financial liberalization progress remains problematic, and the transition from a planned or closed economy to a free market economy is still problematic in emerging economies, investment-cash flow sensitivity and financing constraints play an important role. This sensitivity may be exacerbated by incomplete financial liberalization, which contributes to financial fragility in emerging markets.
3. Bibliometric analysis
The bibliometric analysis considered all 55 papers identified in the previous section, using VOSViewer 1.6.15 due to its convenience and compatibility with various file formats and databases. VOSViewer, developed by Van Eck et al. (2010), is widely used in bibliometric studies (see Molina-García et al., 2022; Donthu et al., 2021).
Figure 1, generated using VOSViewer, demonstrates that the main points highlighted in the existing literature are focused primarily on investment and financing constraints. Co-occurrence analysis generates thematic clusters, where the keywords of each document or paper reflect its content and appear in different papers (this is defined as occurrence). The frequency with which these keywords appear together with the authors' keywords (co-occurrence) helps identify the main themes and the process of knowledge accumulation in the literature (Alayo et al., 2020; Casado-Belmonte et al., 2021; Zong et al., 2013; Molina-García et al., 2022).
VOSviewer reported four thematic clusters characterized by the largest nodes, with terms such as “Financial Constraints,” “Financing Constraints,” “Investment,” “Investment Cash Flow Sensitivity,” and “Corporate Investment”, each appearing at least five times in the existing literature:
- (1)
Cluster 1: Chinese enterprises, debt, financial liberalization, political connection, and Türkiye
- (2)
Cluster 2: Banking system reform, China, state ownership,
- (3)
Cluster 3: Financial crisis, financial development, financial reform, monetary policy
- (4)
Cluster 4: Business groups, generalized method of moments, India
Figure 2 shows the most frequently cited papers in emerging market studies addressing the relationship between investment-cash flow sensitivity and financing constraints. However, aside from Hoshi et al. (1991), most of these studies focus on frameworks for developed countries. In this context, it is very difficult to compare the unique framework of emerging markets with those of developed countries.
4. Discussion
4.1 Theme 1: poor financial development, state-led banking and financial frictions
Studies examining the financing constraints hypothesis in emerging markets often focus on the role of financial liberalization in alleviating such constraints (see Table A1 in the Appendix). In these markets, firms frequently face higher external financing premiums compared to those in developed countries due to limited financial deepening. In theory, financial liberalization should help firms reduce their financing constraints by narrowing the gap between internal and external financing costs, a gap referred to as financial friction [2]. However, due to poor financial development, the banking sector plays a crucial role in providing external finance for firms in emerging markets. The role of banks as key players in the structural transformation of emerging markets has led to the rise of state capitalism, with the state-led banking system becoming increasingly dominant in these economies (Naughton and Tsai, 2015; Nölke et al., 2019; Petry et al., 2023).
In emerging markets, the challenge of overcoming financial frictions is compounded by banks' demands for additional collateral, as well as the difficulties in resolving information asymmetries. Several studies, starting with the seminal paper of Almeida and Campello (2007), have emphasized the role of collateral in addressing these issues. Moshirian et al. (2017) also highlighted this in the context of a comparative study of emerging markets. Therefore, firms operating in these markets should focus on increasing asset tangibility to improve their chances of accessing external finance. More research is needed to analyze financial markets (including the banking sector) within the framework of institutional structures concerning investment-cash flow sensitivity.
4.2 Theme 2: the open nature of emerging markets to business cycles
Emerging markets are vulnerable to external shocks and business cycles, leading to significant fragility. As Akyuz (2008) notes, such sharp fluctuations create uncertainty in these economies, which may prompt firms to forgo or cancel investment or capital expenditures (see Dixit and Pindyck, 1994; Keynes, 1936; Kalecki, 1937). During these periods of economic volatility, financially constrained firms struggle more to secure financing. Table A2 (see Appendix) shows that business cycles or financial crises are key factors influencing investment-cash flow sensitivity for financially constrained firms in emerging markets.
4.3 Theme 3: financing constraints classification paradox and uncommon firm characteristics in emerging markets
The classification of financial constraints in emerging markets is a challenging task. As shown in Table 3, most studies rely on factors such as firm ownership, size, age, and business group membership to determine whether a firm faces financial constraints. The existing literature suggests that small firms, young firms, those affiliated with business groups, and those with state ownership tend to exhibit higher investment-cash flow sensitivity in emerging markets. The relationship between investment and cash flow under the financing constraints hypothesis is widely supported by studies focusing on emerging markets (see Table 3). However, classifications based on developed countries may not fully capture the realities of financial constraints in emerging economies, where weak investor protection and underdeveloped financial sectors are prevalent. Finally, firm-specific characteristics or dynamics that reduce investment-cash flow sensitivity should also be taken into account in the context of emerging markets [3].
Overall, the systematic literature review and bibliometric analysis suggest that there is no universal conclusion or understanding regarding investment-cash flow sensitivity in emerging markets in relation to financing constraints. Most studies frame this sensitivity within the context of financial liberalization (see Table A2 and Figure 1) and financial crises, yet no consensus has been reached. Moreover, the firm dynamics featured in economic models play a significant role in determining the relationship between investment and cash flow sensitivity in emerging markets.
The issue of endogeneity often arises in these models, especially when lagged dependent variables are included as regressors on the right-hand side in the econometric model. Therefore, studies using standard OLS models may be biased. Nearly half of the studies reviewed fail to address this endogeneity issue. Re-estimating these models using the GMM method may yield different conclusions and shift the direction of the literature (see Table 3).
Another problem related to the selection of emerging market samples. First, data availability is often limited, as private companies (which are not listed companies) in emerging economies are rarely included, and the number of listed companies is small compared to developed economies. Second, accounting inconsistencies in emerging markets may limit the information available. For example, China did not have cash flow statements before 1988, and the adoption of International Financial Reporting Standards (IFRS) varies across countries, making comparison between emerging economies difficult. This lack of standardized financial statements forces researchers to rely on surrogate variables, which further restricts the availability of financial data. The adoption of IFRS could potentially improve the availability of financial reports for companies operating in emerging markets (see Ben Cheikh and Ben Rejeb, 2021; for a recent analysis supporting this claim).
Based on the literature review, the following research gaps can be identified:
Research gap 1: To what extent does endogeneity influence investment and cash flow sensitivity in the existing literature, given that most studies use fixed effects or other instrumental regression methods?
Research gap 2: To what extent do country-specific issues hinder the universal applicability of investment-cash flow sensitivity across all emerging markets? What commonalities exist among emerging markets in this regard?
Research gap 3: How does cash flow facilitate investment through the mediating effects of the institutional context in emerging markets?
5. Conclusion
This paper presents a systematic literature review and bibliometric analysis of the financing constraints hypothesis in emerging markets. The existing literature proves the sensitivity of investment-cash flow for firms facing financing constraints in these markets, particularly where financial performance is weak, and capital markets are underdeveloped. It concludes that investment-cash flow sensitivity is an important phenomenon in emerging markets. Governments can offer incentives to financially constrained firms to improve their access to finance.
This study employs a systematic literature review and bibliometric analysis to highlight key aspects of the existing literature on investment-cash flow sensitivity and financing constraints in emerging markets. Financing constraints in these economies should be analyzed by focusing on financing frictions stemming from insufficient financial liberalization, state-led banking systems, firm characteristics, and unstable macroeconomic conditions (such as the business cycle). Additionally, the a priori classification of financial constraints remains a paradox for emerging markets, meriting further attention.
Moreover, policymakers should prioritize improving the efficiency of financial markets, particularly by addressing information asymmetries between parties that could be alleviated through regulation. Access to finance is an important driver of economic growth via the investment channel in emerging markets. Practitioners, especially C-suite executives, should recognize that investment-cash flow sensitivity arises from capital market inadequacies related to low levels of financial development in these markets. Therefore, they should consider strategies to secure financing premiums, especially when operating in firms with limited financial capacity. Designing approaches to access these premiums can help mitigate competitive disadvantages. C-suite executives and practitioners should also be mindful of the recurring business cycles typical of emerging markets.
Figures
Studies included in the present study
No. | The study | Country | Cited by | Journal |
---|---|---|---|---|
1 | Xu and Xu (2019) | China | 4 | China Finance Review International |
2 | Lensink et al. (2003) | India | 125 | Journal of Developing Studies |
3 | Poursoleiman et al. (2020) | Iran | 2 | International Journal of Islamic and Middle Eastern Finance and Management |
4 | Kim (1999) | South Korea | 51 | Small Business Economics |
5 | Chan et al. (2012a) | China | 137 | Economics Letters |
6 | Hanazaki and Liu (2007) | South Korea, Malaysia, the Philippines, Thailand | 53 | Journal of Asian Economics |
7 | Chan et al. (2012b) | China | 197 | Emerging Markets Review |
8 | Yu et al. (2020) | China | 50 | Chinese Economic Review |
9 | Ghosh (2006) | India | 1 | Emerging Markets Review |
10 | Gül and Taştan (2020) | Turkey | 108 | Emerging Markets Review |
11 | Vijayakumaran (2021) | China | 5 | International Review of Economics and Finance |
12 | Fu and Liu (2015) | China | N/A | Research in International Business and Finance |
13 | Rousseau and Kim (2008) | South Korea | 20 | China Journal of Accounting Research |
14 | Kumar and Ranjani (2018) | India | 43 | Journal of Banking and Finance |
15 | Ameer (2014) | India, Indonesia, Malaysia, Pakistan, South Korea, Thailand | 9 | Financial Innovation |
16 | Gupta and Mahakud (2019) | India | 26 | Journal of Asian Economics |
17 | Bhaumik et al. (2012) | India | 21 | Financial Innovation |
18 | O'Toole and Newman (2017) | Viet Nam | 58 | Journal of Banking and Finance |
19 | Kandilov and Leblebicioğlu (2012) | Mexico | 12 | Review of Finance |
20 | Jaramillo et al. (1996) | Ecuador | 16 | The World Bank Review |
21 | Aivazian and Santor (2008) | Sri Lanka | 252 | Journal of Developing Studies |
22 | George et al. (2011) | India | 304 | Canadian Journal of Economics |
23 | Crnigoj and Verbic (2014) | Slovenia | 100 | Journal of Multinational Financial Management |
24 | Ganesh-Kumar et al. (2001) | India | 28 | Economic Systems |
25 | Saeed and Vincent (2012) | India | 105 | Journal of Developing Studies |
26 | Shin and Park (1999) | South Korea | 15 | Emerging Markets Trade and Finance |
27 | Lin and Bo (2012) | China | 656 | Journal of Corporate Finance |
28 | Xu et al. (2013) | China | 60 | European Journal of Finance |
29 | Ro et al. (2017) | South Korea | 175 | European Financial Management |
30 | Ding et al. (2013) | China | 11 | Emerging Markets Trade and Finance |
31 | Demir (2008) | Mexico, Turkey | 311 | Journal of Banking and Finance |
32 | Gezici et al. (2019) | Turkey | 63 | World Development |
33 | Pellicani et al. (2019) | Brazil | 10 | Emerging Markets Trade and Finance |
34 | Srinivasan and Thampy (2017) | India | 1 | Emerging Markets Trade and Finance |
35 | Kuo and Hung (2012) | Taiwan | 16 | Journal of Corporate Finance |
36 | Tsai et al. (2014) | Taiwan | 58 | Corporate Governance: An International Review |
37 | Francis et al. (2011) | Brazil, Chile, Hong Kong, India, Indonesia, South Korea, Malaysia, Pakistan, the Philippines, Singapore, South Africa, Taiwan, Thailand, Turkey | 46 | Journal of Banking and Finance |
38 | Gupta et al. (2020) | India | 119 | Emerging Markets Review |
39 | Machokoto et al. (2021) | Egypt, Ivory Coast, Kenya, Ghana, Morocco, Nigeria, South Africa, Tunisia, Zambia | N/A | International Journal of Managerial Finance |
40 | Ahiadorme et al. (2018) | Ghana | N/A | International Journal of Managerial Finance |
41 | Crisostomo et al. (2014) | Brazil | 13 | International Journal of Emerging Markets |
42 | Guizani and Ajmi (2020) | Saudi Arabia | 26 | International Journal of Managerial Finance |
43 | Sitthipongpanich (2017) | Thailand | N/A | Journal of Economic and Administrative Sciences |
44 | Guizani (2020) | Saudi Arabia | 9 | International Journal of Managerial Finance |
45 | Guizani (2019) | Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) | N/A | International Journal of Finance and Economics |
46 | Altaf and Shah (2018) | India | 2 | Review of Behavioral Finance |
47 | Yeh and Lin (2020) | Taiwan | 21 | Decision |
48 | Gugler and Peev (2010) | Bulgaria, Serbia& Montenegro, Czech Rep., Estonia, Croatia, Hungary, Latvia, Poland, Romania, Slovenia, Slovakia, Ukraine | N/A | Eurasian Business Review |
49 | Sun and Yamori (2009) | China | 16 | Comparative Economic Studies |
50 | Hung and Tseng (2009) | Taiwan | 29 | Pacific Economic Review |
51 | Jiang et al. (2019) | China | 9 | Asia-Pacific Journal of Financial Studies |
52 | Hung and Kuo (2011) | Taiwan | 18 | Journal of Business Ethics |
53 | Guariglia et al. (2012) | Transition economies which are Bulgaria, Czech Republic, Romania, and Poland | 21 | Applied Financial Economics |
54 | Mansour et al. (2017) | Bahrain, Kuwait, Oman, UAE, Saudi Arabia, Qatar | 26 | Economics Letters |
55 | Wan and Zhu (2011) | China | 6 | Emerging Markets Trade and Finance |
352 | China Journal of Accounting Research |
Note(s): N/A is used to the studies are published within last 1 year. For studies that utilize cross-country datasets, if at least one emerging market is included, the study is classified as an emerging market-related
Source(s): The author
The methodologies per study
Note(s): OLS: Ordinary Least Squares, GMM: Generalized Method of Moments, IV: Instrumental Variables Estimations, 2SLS: Two Stages Least Squares; MLogit: Multinomial Logit, Panel FE: Panel Fixed Effects; Matching: Treatment models
Source(s): The author
Financial constraints classifications
The study | FC criterion | Is investment-cash flow sensitivity supported under the financing constraints Hypothesis?a |
---|---|---|
Xu and Xu (2019) | N/A | N/A |
Lensink et al. (2003) | Business group affiliation | Yes |
Poursoleiman et al. (2020) | Debt maturity | Yes |
Kim (1999) | Firm size | Yes |
Chan et al. (2012a) | Politically connected firm status | Yes |
Hanazaki and Liu (2007) | Family ownership status | Yes |
Chan et al. (2012b) | Firm size | Yes |
Yu et al. (2020) | State-owned status, Cash ratio, Firm size, Firm age, Liquidation ratio, Tangibility, Profitability, Product market competition, Firm-specific score | Yes |
Ghosh (2006) | Firm size | Yes |
Gül and Taştan (2020) | Firm size | Yes |
Vijayakumaran (2021) | State-owned status | Yes |
Fu and Liu (2015) | N/A | N/A |
Rousseau and Kim (2008) | Firm size, Firm age, Business group affiliation | Yes |
Kumar and Ranjani (2018) | Ownership, Firm size, Debt capacity, Business group affiliation | Yes |
Ameer (2014) | N/A | N/A |
Gupta and Mahakud (2019) | Dividend payment, Firm size, Business group affiliation | Yes |
Bhaumik et al. (2012) | Firm Size, Business group affiliation, Indebtedness | Yes |
O'Toole and Newman (2017) | State-owned status, Firm size | Yes |
Kandilov and Leblebicioğlu (2012) | N/A | |
Jaramillo et al. (1996) | Firm size, Firm age | Yes |
Aivazian and Santor (2008) | Firm Size | Yes |
George et al. (2011) | Firm Size, Business group affiliation | Yes |
Crnigoj and Verbic (2014) | Firm Size | Yes |
Ganesh-Kumar et al. (2001) | Firm Size, Ownership, exporter status | Yes |
Saeed and Vincent (2012) | Firm Size, Ownership, debt level | Yes |
Shin and Park (1999) | Business group affiliation, Firm size, debt level | Yes |
Lin and Bo (2012) | KZ Index, State ownership | Yes |
Xu et al. (2013) | Politically connected firm status, Quality of corporate governance, Family firms | Yes |
Ro et al. (2017) | Firm size | Yes |
Ding et al. (2013) | Ownership status | Yes |
Demir (2008) | Firm size | Yes, but there is no difference between small firms and large firms |
Gezici et al. (2019) | Firm size, Financing constraints score | Yes |
Pellicani et al. (2019) | Ownership (Family firm status), KZ Index, WW Index | Yes |
Srinivasan and Thampy (2017) | Close banking relationships (especially with government banks) | Yes |
Kuo and Hung (2012) | Family ownership status, Future growth opportunities (Low Q and High Q) | Yes |
Tsai et al. (2014) | Firm Ownership Status, Politically Oriented Firms | Yes |
Francis et al. (2011) | Country and firm- level corporate governance | Yes |
Gupta et al. (2020) | Firm size, Business group affiliation, Firm’s age | Yes |
Machokoto (2021) | WW Index, KZ Index, Debt level, Firm size, HP Index, PP&E level, Dividends | Yes |
Ahiadorme et al. (2018) | N/A | |
Crisostomo et al. (2014) | Dividend payment | Yes |
Guizani and Ajmi (2020) | Business group affiliation | Yes |
Sitthipongpanich (2017) | Family ownership status | Yes |
Guizani (2020) | Family ownership status, Sharia-compliant firms | Yes |
Guizani (2019) | Sharia-compliant firms | Yes |
Altaf and Shah (2018) | Dividend payment status, Coverage status | Yes |
Yeh and Lin (2020) | Business group affiliation, Related party transactions | Yes |
Gugler and Peev (2010) | Firm ownership status | Yes |
Sun and Yamori (2009) | Regional disparity | Yes |
Hung and Tseng (2009) | Firm size, Index classification, Foreign investment ratio | Yes |
Jiang et al. (2019) | Analyst coverage, Diversification | Yes |
Hung and Kuo (2011) | Family ownership status, Future growth opportunities (Low Q and High Q) | Yes |
Guariglia et al. (2012) | Irreversible investment status | Yes |
Mansour et al. (2017) | Working capital level | Yes |
Wan and Zhu (2011) | N/A | N/A |
Note(s): aIf investment-cash flow sensitivity is found to be valid for at least one financing constraints classification, it is reported as “Yes”. WW: Whited-Wu Index, KZ: Kaplan and Zingales Index, HP: Hadlock-Pierce Index, PP&E: Property, Plant and Equipment, Q: Tobin’s Q
Source(s): The author
Notes
This study focuses specifically on studies that directly address emerging markets. In this framework, studies that include mixed samples of emerging markets and developed economies in a cross-country framework are outside the scope of this literature review.
At the same time, Larkin et al. (2018) found a binding relationship between economic development and investment-cash flow sensitivity at the global level. Given that economic development often stimulates financial liberalization, this relationship is believed to align with the findings of this study, which emphasizes the connection between financial liberalization and investment-cash flow sensitivity.
Recently, negative cash flow, cash flow volatility, and cash flow persistence have also emerged as important firm characteristics (see Gatchev et al., 2010; Minton and Schrand, 1999; Moshirian et al., 2017). Although these studies focus on developed economies, these aspects should be further explored within the context of emerging markets.
The supplementary material for this article can be found online.
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Further reading
Bertoni, F., Colombo, M.G. and Croce, A. (2010), “The Effect of venture capital financing on the sensitivity to cash flow of firm's investments”, European Financial Management, Vol. 16 No. 4, pp. 528-551, doi: 10.1111/j.1468-036x.2008.00463.x.
Chang, X., Dasgupta, S., Wong, G. and Yao, J. (2014), “Cash-flow sensitivities and the allocation of internal cash flow”, Review of Financial Studies, Vol. 27 No. 12, pp. 3628-3657, doi: 10.1093/rfs/hhu066.
Chen, Y.-S. and Chen, I.-J. (2013), “The impact of labor unions on investment-cash flow sensitivity”, Journal of Banking and Finance, Vol. 37 No. 7, pp. 2408-2418, doi: 10.1016/j.jbankfin.2013.02.001.
Cleary, S. (1999), “The relationship between firm investment and financial status”, The Journal of Finance, Vol. 54 No. 2, pp. 673-692, doi: 10.1111/0022-1082.00121.
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Fazzari, S.M. and Petersen, B.C. (1993), “Working capital and fixed investment: new evidence on finance constraints”, The RAND Journal of Economics, Vol. 24 No. 3, pp. 328-342, doi: 10.2307/2555961.
Kashefi‐Pour, E., Amini, S., Uddin, M. and Duxbury, D. (2020), “Does cultural difference affect investment–cash flow sensitivity? Evidence from OECD countries”, British Journal of Management, Vol. 31 No. 3, pp. 636-658, doi: 10.1111/1467-8551.12394.
Page, M.J., McKenzie, J.E., Bossuyt, P.M., Boutron, I., Hoffmann, T.C., Mulrow, C.D., Shamseer, L., Tetzlaff, J.M., Akl, E.A., Brennan, S.E., Chou, R., Glanville, J., Grimshaw, J.M., Hróbjartsson, A., Lalu, M.M., Li, T., Loder, E.W., Mayo-Wilson, E., McDonald, S., McGuinness, L.A., Stewart, L.A., Thomas, J., Tricco, A.C., Welch, V.A., Whiting, P. and Moher, D. (2021), “The PRISMA 2020 statement: an updated guideline for reporting systematic reviews”, BMJ, Vol. 372 No. 71, p. n71, doi: 10.1136/bmj.n71.
Acknowledgements
Some parts of this study are derived from the Ph.D. thesis/dissertation titled “The Determinants of Investment in the Manufacturing Sector in Turkey”, which was submitted to Kadir Has University in 2017 and completed under the supervision of Professor Özgür Orhangazi.