Financial constraints and the interdependence of corporate financial decisions

Kirch, Guilherme; Terra, Paulo Renato

doi:10.1108/RAUSP-01-2019-0003

Guilherme Kirch

Universidade Federal do Rio Grande do Sul, Porto Alegre, Brazil

Paulo Renato Terra ^**Corresponding author Paulo Renato Terra can be contacted at: paulo.terra@fgv.br

Escola de Administração de Empresas de São Paulo da Fundação Getúlio Vargas (FGV- EAESP), São Paulo, Brazil

https://orcid.org/0000-0003-1486-120X

*Corresponding author Paulo Renato Terra can be contacted at: paulo.terra@fgv.br

Associate Editor: Luiz Paulo Fávero

Guilherme Kirch and Paulo Renato Terra contributed to all aspects of this article equally.

Variable	Formula/operationalization	Compustat item
Investment in physical capital (I )	Capital expenditures/Total assets	capx/at
Change in cash holdings (ΔCash)	Change in Cash/Total Assets	Δ che/at
Dividends (*Div*)	Dividends/Total assets	dvt/at
Change in debt (ΔDebt)	Change in Short- and Long-Term Debt/Total Assets	Δ(dlc + dltt)/at
Change in net working capital (ΔNWC )	Change in (Current Assets less Cash minus Current Liabilities less Short-Term Debt)/Total Assets	Δ((act – che) – (lct – dlc))/at
Capital stock (K )	Net fixed assets/Total assets	ppent/at
Cash holdings (*Cash*)	Cash/Total assets	che/at
Debt stock (*Debt* )	Short- and Long-Term debt/Total assets	(dlc + dltt)/at
Tobin’s Q (Q)	Market value of Assets/Total Assets	(at + csho × prcc_f – ceq – txdb)/at
Cash flows (CF)	(Earnings before Extraordinary Items + Depreciation)/Total Assets	(ib + dp)/at
Recoverable fraction of assets (*RFA*)	(Cash + Accounts receivable + Inventories + Net fixed assets)/total assets × EffDebtEnforc	(che + rect + invt + ppent)/at × EffDebtEnforc
Size (*Size*)	Natural log of total assets	Ln(at)
Hedging needs (HN )	See text
Operational risk (*Risk*)	Return on Assets (ROA) standard deviation. Moving window from t−5 to t + 2, with at least 3 observations	ROA = oibdp/at

Statistic	Sample	I	ΔCash	Div	ΔDebt	ΔNWC	K	Cash	Debt	Q	CF	RFA	Size	HN	Risk
Panel A
Mean	Unconstrained	0.051	0.006	0.014	0.005	0.002	0.310	0.123	0.248	1.564	0.078	0.612	7.700	0.210	0.037
	Constrained	0.050	−0.006	0.011	−0.006	−0.002	0.323	0.152	0.205	1.502	0.034	0.703	4.499	0.182	0.067
	Difference	0.001	0.012	0.002	0.011	0.004	−0.014	−0.028	0.043	0.062	0.044	−0.092	3.201	0.028	−0.030
	Total	0.050	0.000	0.013	0.000	0.000	0.317	0.137	0.226	1.533	0.056	0.658	6.100	0.196	0.052
Panel B
Median	Unconstrained	0.041	0.002	0.008	−0.001	0.003	0.288	0.088	0.239	1.264	0.079	0.644	7.618	0.000	0.029
	Constrained	0.036	0.000	0.004	−0.001	0.003	0.306	0.107	0.169	1.090	0.063	0.763	4.521	0.000	0.046
	Difference	0.006	0.002	0.004	0.000	0.000	−0.018	−0.019	0.070	0.174	0.016	−0.120	3.098	0.000	−0.017
	Total	0.039	0.001	0.006	−0.001	0.003	0.298	0.096	0.208	1.187	0.072	0.710	5.728	0.000	0.036
Panel C
Standard Deviation	Unconstrained	0.039	0.064	0.018	0.086	0.056	0.166	0.119	0.165	0.973	0.074	0.181	1.340	0.407	0.031
	Constrained	0.046	0.089	0.021	0.094	0.082	0.159	0.152	0.185	1.178	0.142	0.173	0.845	0.386	0.064
	Total	0.043	0.078	0.020	0.090	0.070	0.163	0.137	0.176	1.081	0.115	0.183	1.953	0.397	0.052

Explanatory variables	Unconstrained		Constrained
Explanatory variables	I	II	I	II
Panel A: Investment equation − I (t)
ΔCash (t)	0.0189^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (2.61)	0.0001 (0.01)	−0.0381^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−4.42)	−0.1593^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−11.58)
Div (t)	0.0253 (0.40)	−0.1683^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−2.82)	−0.1397* (−1.72)	0.3260^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (3.01)
ΔDebt (t)	0.0867^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (11.74)	0.0612^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (7.55)	0.1411^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (16.31)	0.1442^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (16.66)
ΔNWC (t)	−0.0309^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−4.52)	−0.0029 (−0.56)	−0.0632^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−9.23)	−0.1137^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−14.42)
Q (t−1)	0.0024^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (7.76)	0.0028^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (11.17)	0.0044^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (10.70)	0.0058^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (7.84)
CF (t)	−0.0076 (−0.84)	−0.0166* (−1.73)	0.0033 (0.25)	0.0162 (1.36)
RFA (t)	0.0731^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (19.97)	0.1032^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (26.49)	0.1242^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (21.36)	0.0907^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (15.25)
CF × RFA (t)	0.0725^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (5.24)	0.0409^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (3.22)	0.0641^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (3.63)	0.0889^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (4.92)
Adj. R-squared	14.3%	11.0%	17.5%	19.1%
Panel B: liquidity demand equation – ΔCash (t)
I (t)	3.2772^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (13.81)	3.7850^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (14.04)	0.9198^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (7.21)	0.1285^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (4.04)
Div (t)	−0.4359 −(1.57)	0.1756 (0.59)	0.3180 (1.53)	0.0227 (0.38)
ΔDebt (t)	−0.2042^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−5.63)	−0.0171 (−0.36)	0.0210 (0.74)	0.0022 (0.32)
ΔNWC (t)	−0.1315^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−4.72)	−0.3284^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−14.02)	−0.2257^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−13.44)	0.0077 (1.40)
CF (t)	0.0607^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (2.76)	0.2992^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (14.55)	0.2262^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (16.57)	0.0207^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (4.68)
CF × HN (t)	−0.0503* (−1.79)	−0.0701^ Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−2.34)	−0.0188 (−0.78)	0.0092 (1.22)
Adj. R-squared	−167.4%	−83.3%	12.1%	74.2%
Panel C: dividend equation – Div (t)
I (t)	0.1022^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (4.41)	0.0302 (1.56)	0.0611^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (3.91)	0.0530^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (3.36)
ΔCash (t)	−0.0124^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−4.29)	−0.0103^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−5.02)	−0.0083^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−2.30)	−0.0135^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−3.01)
ΔDebt (t)	0.0040 (1.14)	0.0069* (1.84)	0.0025 (0.59)	0.0190^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (5.53)
ΔNWC (t)	−0.0142^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−5.70)	−0.0152^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−6.35)	−0.0095^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−3.29)	−0.0158^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−5.47)
CF (t)	0.0162^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (8.14)	0.0160^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (9.87)	0.0114^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (5.07)	0.0203^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (9.03)
Adj. R-squared	11.8%	10.6%	8.3%	7.3%
Panel D: debt equation – ΔDebt (t)
I (t)	0.9362^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (4.84)	−0.1464 (−1.11)	−0.1106 (−0.86)	0.0754 (0.40)
ΔCash (t)	0.1815^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (7.41)	0.0940^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (7.62)	0.2094^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (10.48)	0.2753^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (6.44)
Div (t)	1.2065^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (6.90)	0.3433^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (2.58)	0.2294 (1.17)	1.6464^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (5.21)
ΔNWC (t)	0.5001^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (29.99)	0.2458^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (19.49)	0.4253^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (29.51)	0.5924^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (36.73)
CF (t)	−0.2587^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−13.82)	−0.1523^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−12.59)	−0.2613^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−18.39)	−0.3322^* Notes: We only report the coefficients for the main variables (complete tables are available upon request). The t-statistics are in brackets. The superscripts , * and * denote statistical significance at the 1, 5 and 10% levels, respectively. Columns I and II refer to the firm size and financial slack criteria, respectively. See Table I for details on the computation of the variables included in the regressions. In total, 60,488 observations (8,791 firms, unbalanced panel) from 62 countries (−17.60)
CF × HN (t)	−0.0439 −(1.14)	−0.0179 (−0.77)	0.0160 (0.59)	0.0085 (0.25)
Adj. R-squared	30.5%	27.7%	34.8%	40.6%

\begin{matrix} I_{i, t} = α_{0 i} + α_{1} Δ C a s h_{i, t} + α_{2} D i v_{i, t} + α_{3} Δ D e b t_{i, t} + α_{4} Δ N W C_{i, t} + α_{5} K_{i, t - 1} + α_{6} Q_{i, t - 1} + α_{7} C F_{i, t} + α_{8} R F A_{i, t} + α_{9} (C F_{i, t} \times R F A_{i, t}) + μ_{t} + ε_{i, t}^{I} \end{matrix}

\begin{matrix} Δ C a s h_{i, t} = β_{0 i} + β_{1} I_{i, t} + β_{2} D i v_{i, t} + β_{3} Δ D e b t_{i, t} + β_{4} Δ N W C_{i, t} + β_{5} C a s h_{i, t - 1} + β_{6} S i z e_{i, t} + β_{7} Q_{i, t} + β_{8} C F_{i, t} + β_{9} (C F_{i, t} \times H N_{i}) + η_{t} + ε_{i, t}^{Δ C a s h} \end{matrix}

\begin{matrix} D i v_{i, t} = γ_{0 i} + γ_{1} I_{i, t} + γ_{2} Δ C a s h_{i, t} + γ_{3} Δ D e b t_{i, t} + γ_{4} Δ N W C_{i, t} + γ_{5} D i v_{i, t - 1} + γ_{6} S i z e_{i, t} + γ_{7} Q_{i, t} + γ_{8} C F_{i, t} + τ_{t} + ε_{i, t}^{D i v} \end{matrix}

\begin{matrix} Δ D e b t_{i, t} = π_{0 i} + π_{1} I_{i, t} + π_{2} Δ C a s h_{i, t} + π_{3} D i v_{i, t} + π_{4} Δ N W C_{i, t} + π_{5} D e b t_{i, t - 1} + π_{6} S i z e_{i, t} + π_{7} Q_{i, t} + π_{8} C F_{i, t} + π_{9} (C F_{i, t} \times H N_{i}) + π_{10} R F A_{i, t} + π_{10} R i s k_{i, t} + κ_{t} + ε_{i, t}^{Δ D e b t} \end{matrix}

[1] *Corresponding author Paulo Renato Terra can be contacted at: paulo.terra@fgv.br

Brasil

Brasil

Financial constraints and the interdependence of corporate financial decisions

Abstract

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Design/methodology/approach

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