Cash-Flow and Investment: A Panel Quantile Approach

KOC, Umit and SAHIN, Hasan (2016): Cash-Flow and Investment: A Panel Quantile Approach. Published in: Empirical Economics Letters , Vol. 16(2), No. 2017 (February 2017): pp. 131-141.

Abstract

The investment behaviors of firms are affected mainly by financial climate and conditions of economic environment in which they operate. Besides macro variables such as real interest rates, firms carefully evaluate their balance sheet items in their investment decisions. Classic regression analysis provides the possible impact of explanatory variables on the mean value of investment. Although, in some cases, it is very important to know how the mean level of investment is affected by the variables, it could be much more important to know, especially for policy makers, how each quantile of investment is affected by the variables. Based on effects of the variables on quantiles, different policy options can be produced and advised. In this study, a panel quantile regression approach has been used to analyze the effect of real interest rates, currency rates, cash flows and sales on investments by using a data set from Turkey.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cash-flow, investment, fixed-effect, panel quantile, correlated random effect
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; D - Microeconomics > D2 - Production and Organizations > D22 - Firm Behavior: Empirical Analysis

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