We investigate a firm’s joint decision to hold cash and to hedge in the presence of financial constraints. The predictions are tested using a sample of manufacturing firms. We confirm the existing evidence of a positive sensitivity of cash holdings to cash flow for financially constrained firms. More importantly, we find a positive sensitivity of hedging to cash flow for constrained firms and, ...

Understanding financial statements is imperative for better management of corporations, while system dynamics (SD) offers dynamic modeling and simulation skills for better strategies of management. This paper tries to present a consolidated principle of accounting system dynamics on the basis of simple principles from SD and accounting system. It is, then, specifically applied to model corporat...

Economic theory posits that capital should, on net, flow from richer to poorer countries. Specifically, in the benchmark neoclassical model, capital should flow from countries that have relatively high capital-to-labor ratios to countries that have relatively low ratios. In an influential paper, Lucas (1990) notes that flows of capital from the north to the south are nowhere near the levels pre...

The excessive level of construction business failures and their association with financial difficulties has placed financial management in the forefront of many business imperatives. This has highlighted the importance of cash flow forecasting and management which has given rise to the development of several forecasting models. The traditional approach to the use of project financial models has...

This paper examines the impact of a change of focus by a firm, as signified by stock market reclassification. It distinguishes between sector reclassifications that are motivated by information specific to a particular firm, and those that result from sector redefinitions and reorganisations. The direction of the price effects following reclassification depends significantly upon this distincti...

What are the drivers of the large Target2 (T2) balances that have emerged in the European Monetary Union since the start of the financial crisis in 2007? This paper examines the extent to which the evolution of national T2 balances can be statistically associated with cross-border financial flows and current account (CA) balances. In a quarterly panel spanning the years 1999 to 2012 and twelve ...