Do Liquidity Constraints Matter in Explaining Firm Size and Growth ? Some Evidence from the Italian Manufacturing Industry ∗

@inproceedings{Fagiolo2004DoLC,
  title={Do Liquidity Constraints Matter in Explaining Firm Size and Growth ? Some Evidence from the Italian Manufacturing Industry ∗},
  author={Giorgio Fagiolo and Alessandra Luzzi},
  year={2004}
}
The paper investigates whether liquidity constraints affect firm size and growth dynamics using a large longitudinal sample of Italian manufacturing firms. We run standard panel-data Gibrat regressions, suitably expanded to take into account liquidity constraints (proxied by cash flow scaled by firm sales). Moreover, we characterize the statistical properties of firms size, growth, age, and (scaled) cash flow distributions. Pooled data show that: (i) liquidity constraints engender a negative… CONTINUE READING
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