Comovement of Sales, Retention Practice and Financing Constraints in Dutch Manufacturing

This paper assesses the significance of financing constraints in investment decisions for a balanced panel of 206 of the largest Dutch manufacturing firms over the period 1983-1996, employing split sample analysis of reduced form investment equations. Our empirical evidence demonstrates that financing constraints matter in Dutch manufacturing and are associated with high retention practice and strong firm-industry sales comovement.mathematical economics;

Non-linear Target Adjustment in Corporate Liquidity Management: An Endogenous Thresholds Approach

We provide new empirical evidence on non-linear liquidity management in Dutch firms. Our results reveal that liquidity adjustment from below the target is significantly faster than from above. We find no evidence for bands of inaction around the target

Dutch Corporate Liquidity Management: New Evidence on Aggregation

In this paper we investigate Dutch corporate liquidity management in general, and target adjustment behaviour in particular. To this purpose, we use a simple error correction model of corporate liquidityholdings applied to firm-level data for the period 1977-1997. We confirm the existence of long-run liquidity targets at the firm level. We also find that changes in liquidity holdings are driven by short-run shocks as well as the urge to converge towards targeted liquidity levels. The rate of target convergence is higher when we include more firm-specific information in the target. This result supports the idea that the degree of error in defining liquidity targets associates negatively with the observed rate of target convergence. It also suggests that the slow speeds of adjustment obtained in many macro studies on money demand are artefacts of aggregation bias