Financing Constraints and Corporate Investment

Most empirical models of investment rely on the assumption that firms are able to respond to prices set in centralized securities markets (through the "cost of capital" or "q"). An alternative approach emphasizes the importance of cash flow as a determinant of investment spending, because of a "financing hierarchy," in which internal finance has important cost advantages over external finance. We build on recent research concerning imperfections in markets for equity and debt. This work suggests that some firms do not have sufficient access to external capital markets to enable them to respond to changes in the cost of capital, asset prices, or tax-based investment incentives. To the extent that firms are constrained in their ability to raise funds externally, investment spending may be sensitive to the availability of internal finance. That is, investment may display "excess sensitivity" to movements in cash flow. In this paper, we work within the q theory of investment, and examine the importance of a financing hierarchy created by capital-market imperfections. Using panel data on individual manufacturing firms, we compare the investment behavior of rapidly growing firms that exhaust all of their internal finance with that of mature firms paying dividends. We find that q values remain very high for significant periods of time for firms paying no dividends, relative to those for mature firms. We also find that investment is more sensitive to cash flow for the group of firms that our model implies is most likely to face external finance constraints. These results are consistent with the augmented model we propose, which takes into account different financing regimes for different groups of firms. Some extensions and implications for public policy are discussed at the end.

Financing Constraints and Corporate Investment: Response to Kaplan and Zingales

Kaplan and Zingales (1995, hereafter KZ) criticize Fazzari, Hubbard and Petersen (1988, hereafter FHP) and much ensuing research that uses cross-sectional differences in firm behavior to test for financing constraints on investment. This reply identifies flaws in the KZ analysis. The questions KZ raise have been considered extensively and rigorously in the literature (most of which is not addressed in KZ), with results broadly similar to those of FHP. We also challenge both of KZ's main results. First, their finding that most of the FHP firms are not financially constrained relies on an inappropriate operational definition of what it means to be constrained. Their definition ignores the incentives for firms that operate in imperfect capital markets to accumulate stocks of cash or maintain unused debt capacity to offset partially shocks to the flow of internal finance. Second, the KZ regression results (lower sensitivity of investment to cash flow for firms classified as constrained than for those classified as unconstrained) are uninformative. Their classification approach relies on possibly self- serving managerial statements that may present a distorted picture of firm's availability of finance. It also employs misleading criteria to make unrealistically fine distinctions in the degree of financing constraints, and emphasizes financial distress rather than financing constraints. Finally, econometric problems affect the interpretation of the KZ regressions. We conclude that the KZ findings do not contradict the interpretation of the empirical results in FHP and subsequent research.

Financing Constraints and Corporate Investment

macroeconomics, Financing Constraints, Corporate Investment

License prices for financially constrained firms

It is often alleged that high auction prices inhibit service deployment. We investigate this claim under the extreme case of financially constrained bidders. If demand is just slightly elastic, auctions maximize consumer surplus if consumer surplus is a convex function of quantity (a common assumption), or if consumer surplus is concave and the proportion of expenditure spent on deployment is greater than one over the elasticity of demand. The latter condition appears to be true for most of the large telecom auctions in the US and Europe. Thus, even if high auction prices inhibit service deployment, auctions appear to be optimal from the consumers’ point of view

The effects of financialisation and financial development on investment: Evidence from firm-level data in Europe

In this paper we estimate the effects of financialization on physical investment in selected western European countries using panel data based on the balance-sheets of publicly listed non-financial companies (NFCs) supplied by Worldscope for the period 1995-2015. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets by the NFCs. This finding is robust for both the pool of all Western European firms and single country estimations. The negative impacts of financial incomes are non-linear with respect to the companies’ size: financial incomes crowd-out investment in large companies, and have a positive effect on the investment of only small, relatively more credit-constrained companies. Moreover, we find that a higher degree of financial development is associated with a stronger negative effect of financial incomes on companies’ investment. This finding challenges the common wisdom on ‘finance-growth nexus’. Our findings support the ‘financialization thesis’ that the increasing orientation of the non-financial sector towards financial activities is ultimately leading to lower physical investment, hence to stagnant or fragile growth, as well as long term stagnation in productivity

GM1 promotes TrkA-mediated neuroblastoma cell differentiation by occupying a plasma membrane domain different from TrkA

Recently, we highlighted that the ganglioside GM1 promotes neuroblastoma cells differentiation by activating the TrkA receptor through the formation of a TrkA\u2013GM1 oligosaccharide complex at the cell surface. To study the TrkA\u2013GM1 interaction, we synthesized two radioactive GM1 derivatives presenting a photoactivable nitrophenylazide group at the end of lipid moiety, 1 or at position 6 of external galactose, 2; and a radioactive oligosaccharide portion of GM1 carrying the nitrophenylazide group at position 1 of glucose, 3. The three compounds were singly administered to cultured neuroblastoma Neuro2a cells under established conditions that allow cell surface interactions. After UV activation of photoactivable compounds, the proteins were analyzed by PAGE separation. The formation of cross-linked TrkA\u2013GM1 derivatives complexes was identified by both radioimaging and immunoblotting. Results indicated that the administration of compounds 2 and 3, carrying the photoactivable group on the oligosaccharide, led to the formation of a radioactive TrkA complex, while the administration of compound 1 did not. This underlines that the TrkA\u2013GM1 interaction directly involves the GM1 oligosaccharide, but not the ceramide. To better understand how GM1 relates to the TrkA, we isolated plasma membrane lipid rafts. As expected, GM1 was found in the rigid detergent-resistant fractions, while TrkA was found as a detergent soluble fraction component. These results suggest that TrkA and GM1 belong to separate membrane domains: probably TrkA interacts by \u2018flopping\u2019 down its extracellular portion onto the membrane, approaching its interplay site to the oligosaccharide portion of GM1. (Figure presented.)

Filosofia e orientamento. Opportunità e questioni da un’esperienza di PCTO

Il testo discute il rapporto tra filosofia e apprendimento a partire da un'esperienza di PCTO svolta in alcuni licei genovesi nell'anno scolastico 2022/2

Peculiar Velocity Limits from Measurements of the Spectrum of the Sunyaev-Zel'dovich Effect in Six Clusters of Galaxies

We have made measurements of the Sunyaev-Zel'dovich (SZ) effect in six galaxy clusters at z > 0.2 using the Sunyaev-Zel'dovich Infrared Experiment (SuZIE II) in three frequency bands between 150 and 350 GHz. Simultaneous multi-frequency measurements have been used to distinguish between thermal and kinematic components of the SZ effect, and to significantly reduce the effects of variations in atmospheric emission which can otherwise dominate the noise. We have set limits to the peculiar velocities of each cluster with respect to the Hubble flow, and have used the cluster sample to set a 95% confidence limit of < 1410 km/s to the bulk flow of the intermediate-redshift universe in the direction of the CMB dipole. This is the first time that SZ measurements have been used to constrain bulk flows. We show that systematic uncertainties in peculiar velocity determinations from the SZ effect are likely to be dominated by submillimeter point sources and we discuss the level of this contamination.Comment: Submitted to Astrophysical Journal. 32 pages, 13 tables, 9 figure

Blood Vessel Detection Algorithm for Tissue Engineering and Quantitative Histology.

Immunohistochemistry for vascular network analysis plays a fundamental role in basic science, translational research and clinical practice. However, identifying vascularization in histological tissue images is time consuming and markedly depends on the operator's experience. In this study, we present "blood vessel detection-BVD", an automatic algorithm for quantitative analysis of blood vessels in immunohistochemical images. BVD is based on extraction and analysis of low-level image features and spatial filtering techniques, which do not require a training phase. BVD algorithm performance was comparatively evaluated on histological sections from three different in vivo experiments. Collectively, 173 independent images were analyzed, and the algorithm's results were compared to those obtained by human operators. The developed BVD algorithm proved to be a robust and versatile tool, being able to quantify number, area, and spatial distribution of blood vessels within all three considered histologic datasets. BVD is provided as an open-source application working on different operating systems. BVD is supported by a user-friendly graphical interface designed to facilitate large-scale analysis

Parkinson&apos;s disease recovery by GM1 oligosaccharide treatment in the B4galnt1+/- mouse model

Given the recent in vitro discovery that the free soluble oligosaccharide of GM1 is the bioactive portion of GM1 for neurotrophic functions, we investigated its therapeutic potential in the B4galnt1+/- mice, a model of sporadic Parkinson's disease. We found that the GM1 oligosaccharide, systemically administered, reaches the brain and completely rescues the physical symptoms, reduces the abnormal nigral \u3b1-synuclein content, restores nigral tyrosine hydroxylase expression and striatal neurotransmitter levels, overlapping the wild-type condition. Thus, this study supports the idea that the Parkinson's phenotype expressed by the B4galnt1+/- mice is due to a reduced level of neuronal ganglioside content and lack of interactions between the oligosaccharide portion of GM1 with specific membrane proteins. It also points to the therapeutic potential of the GM1 oligosaccharide for treatment of sporadic Parkinson's disease