Corporate governance and investment cash-flow sensitivity: evidence from Tunisia
by Dorra Ellouze; Wafa Cherif
Afro-Asian J. of Finance and Accounting (AAJFA), Vol. 10, No. 2, 2020

Abstract: The aim of this paper is to investigate the effect of corporate governance quality on investment cash-flow sensitivity. We use panel data for a sample of 40 Tunisian non-financial firms listed on the stock exchange over the 2007 to 2016 period. Our results indicate that investment is sensitive to cash-flow but this investment cash-flow sensitivity is reduced when firms exhibit better governance quality. These findings suggest that improvement of corporate governance can solve agency problems and reduce financial constraints. We conclude that better governance leads to more efficient investment allocation in Tunisia.

Online publication date: Thu, 02-Apr-2020

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