Institutional Determinants of Investment-Cash Flow Sensitivities in Transition Economies

Publication: Scientific journalJournal articlepeer-review


We estimate investment-cash flow models for a large sample of firms in 13 transition economies over the period 1993–2003, and find that (1) investment-cash flow sensitivities decline over transition years; (2) for state-owned firms, in early transition the investment-cash flow sensitivity is negative, which we interpret as being consistent with soft budget constraints; (3) privatised firms invest efficiently; and (4) foreign-controlled firms are less financially constrained than other firms.
Original languageEnglish
Pages (from-to)62 - 81
JournalComparative Economic Studies
Publication statusPublished - 2010
Externally publishedYes

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502013 Industrial economics

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