Corporate Governance and Liquidity Constraints: A Dynamic Analysis

Bersant Hobdari, Niels Mygind, Derek C. Jones

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    Rich panel data for a large and representative sample of Estonian firms are used to estimate the sensitivity of access to capital to differing ownership structures. This is done through explicitly modelling firm investment behaviour in a dynamic setting in the presence of adjustment costs, liquidity constraints and imperfect competition. We estimate Euler equations derived in the presence of symmetric and quadratic adjustment costs and both debt and equity constraints. Generalized Method of Moments (GMM) estimates confirm the importance of access to capital in determining investment rates and suggest that firms owned by insiders, especially non-managerial employees, are more prone to be liquidity constrained than others.
    TidsskriftComparative Economic Studies
    Udgave nummer1
    Sider (fra-til)82-103
    Antal sider22
    StatusUdgivet - 2010