The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile

We examine the effects of internal capital markets on the propensity of firms to save cash from cash flows (i.e., the cash flow sensitivity of cash). We argue that firms that are net providers of funds to related parties must maintain a higher cash flow sensitivity of cash to prevent high levels of...

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Autores Principales: Jara Bertín, Mauricio, Pinto Gutiérrez, Cristian, Pombo Vejarano, Carlos
Formato: Desconocido (Unknown)
Lenguaje:Inglés (English)
Publicado: Universidad de los Andes, Facultad de Economía, CEDE 2018
Materias:
G32
Acceso en línea:http://hdl.handle.net/1992/8847
id ir-1992-8847
recordtype dspace
spelling ir-1992-88472020-09-16T20:21:47Z The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile El efecto de los préstamos intra-grupo sobre la propensión a ahorrar en activos líquidos : evidencia de Chile Jara Bertín, Mauricio Pinto Gutiérrez, Cristian Pombo Vejarano, Carlos Internal capital markets Cash flow sensitivity of cash Pyramidal structure Business groups Financial constraints Mercado de capitales - Chile Movimiento de capitales - Chile Flujo de caja - Chile G32 We examine the effects of internal capital markets on the propensity of firms to save cash from cash flows (i.e., the cash flow sensitivity of cash). We argue that firms that are net providers of funds to related parties must maintain a higher cash flow sensitivity of cash to prevent high levels of pressure on their cash holdings in contrast to net receivers of intra-holding funds. Based on a panel of listed firms in Chile, we test this premise and examine how a firm's differences in accounts receivable and accounts payable from related companies affects its cash flow sensitivity of cash. The results confirm that firms with high levels of net loans to related companies have higher cash flow sensitivities of cash and that this relationship is strongest for firms affiliated with business groups and family-owned firms. Furthermore, providers of funds that have the propensity for high savings are those firms that are more financially constrained suggesting that the cash flow sensitivity of cash is an adequate indicator to capture financing constraints. Este documento examina los efectos de los mercados internos de capital sobre la propensión de las empresas a ahorrar dinero en efectivo a partir de los flujos de efectivo (es decir, la sensibilidad al flujo de efectivo del efectivo). Argumentamos que las empresas que son proveedoras netas de fondos para partes relacionadas deben mantener una mayor sensibilidad al flujo de efectivo del efectivo para evitar altos niveles de presión sobre sus tenencias de efectivo, en contraste con los receptores netos de fondos dentro de la tenencia. Con base en un panel de firmas cotizadas en Chile, probamos esta premisa y examinamos cómo las diferencias de una empresa en las cuentas por cobrar y en las cuentas por pagar de las compañías relacionadas afectan su sensibilidad al flujo de efectivo del efectivo. Los resultados confirman que las empresas con altos niveles de préstamos netos a empresas relacionadas tienen una mayor sensibilidad al flujo de caja de dinero en efectivo y que esta relación es más fuerte para las empresas afiliadas a grupos empresariales y empresas familiares. Además, los proveedores de fondos que tienen la propensión a obtener altos ahorros son aquellas empresas que tiene mayores restricciones financieras, lo que sugiere que la sensibilidad al flujo de efectivo del efectivo es un indicador adecuado para capturar las restricciones de financiamiento. 2018-09-27T16:58:02Z 2018-09-27T16:58:02Z 2018 document publishedVersion 1657-5334 http://hdl.handle.net/1992/8847 1657-7191 eng Documentos CEDE No. 08 Enero de 2018 Al consultar y hacer uso de este recurso, está aceptando las condiciones de uso establecidas por los autores. openAccess Universidad de los Andes, Facultad de Economía, CEDE instname:Universidad de los Andes reponame:Repositorio Institucional Séneca
institution Universidad de los Andes
collection DSpace
language Inglés (English)
topic Internal capital markets
Cash flow sensitivity of cash
Pyramidal structure
Business groups
Financial constraints
Mercado de capitales - Chile
Movimiento de capitales - Chile
Flujo de caja - Chile
G32
spellingShingle Internal capital markets
Cash flow sensitivity of cash
Pyramidal structure
Business groups
Financial constraints
Mercado de capitales - Chile
Movimiento de capitales - Chile
Flujo de caja - Chile
G32
Jara Bertín, Mauricio
Pinto Gutiérrez, Cristian
Pombo Vejarano, Carlos
The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile
description We examine the effects of internal capital markets on the propensity of firms to save cash from cash flows (i.e., the cash flow sensitivity of cash). We argue that firms that are net providers of funds to related parties must maintain a higher cash flow sensitivity of cash to prevent high levels of pressure on their cash holdings in contrast to net receivers of intra-holding funds. Based on a panel of listed firms in Chile, we test this premise and examine how a firm's differences in accounts receivable and accounts payable from related companies affects its cash flow sensitivity of cash. The results confirm that firms with high levels of net loans to related companies have higher cash flow sensitivities of cash and that this relationship is strongest for firms affiliated with business groups and family-owned firms. Furthermore, providers of funds that have the propensity for high savings are those firms that are more financially constrained suggesting that the cash flow sensitivity of cash is an adequate indicator to capture financing constraints.
format Desconocido (Unknown)
author Jara Bertín, Mauricio
Pinto Gutiérrez, Cristian
Pombo Vejarano, Carlos
author_facet Jara Bertín, Mauricio
Pinto Gutiérrez, Cristian
Pombo Vejarano, Carlos
author_sort Jara Bertín, Mauricio
title The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile
title_short The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile
title_full The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile
title_fullStr The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile
title_full_unstemmed The effect of intra-group loans on the cash flow sensitivity of cash : evidence from Chile
title_sort effect of intra-group loans on the cash flow sensitivity of cash : evidence from chile
publisher Universidad de los Andes, Facultad de Economía, CEDE
publishDate 2018
url http://hdl.handle.net/1992/8847
_version_ 1705932422228475904
score 12,131701