Title: Corporate governance and investment cash-flow sensitivity: evidence from Tunisia

Authors: Dorra Ellouze; Wafa Cherif

Addresses: Ecole Supérieure de Commerce de Tunis, Univ. Manouba, RIM RAF UR 13ES56, Campus universitaire Manouba, 2010, Tunisia ' Ecole Supérieure de Commerce de Tunis, Univ. Manouba, Campus universitaire Manouba, 2010, Tunisia

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.

Keywords: investment cash-flow sensitivity; financial constraints; corporate governance.

DOI: 10.1504/AAJFA.2020.106254

Afro-Asian Journal of Finance and Accounting, 2020 Vol.10 No.2, pp.168 - 183

Received: 20 Oct 2017
Accepted: 27 Jun 2018
Published online: 02 Apr 2020 *

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