期刊名称：HIER Discussion Paper Series / Harvard Institute of Economic Research
出版年度：2005
卷号：2005
出版社：Harvard Institute of Economic Research
摘要：Both agency- and non-agency-based interpretations have been proposed to explain
the strong positive empirical relationship between corporate cash flow and
corporate investment. In this paper, we attempt to distinguish between these
different interpretations using project-level data in the oil and gas industry.
The specific projects we consider are mineral exploration leases on tracts of
land. The standard positive relationship between investment and cash flow holds
for these projects, in that we find that positive shocks to residual cash flow
(netting out firm and time effects) are associated with higher spending on these
projects. Interestingly, the increased investment comes from an increase in the
price paid per tract with little to no change in the total number of tracts or
total acreage of land bought. The positive association between price and cash
flow holds even after controlling for a set of tract and firm characteristics
that might be ex-ante related to expected return on a given tract. This data is
most useful, however, because we can directly observe the eventual productivity
of the projects undertaken. We find that the variation in bid price induced by
higher cash flow is, if anything, negatively related to tract productivity. More
importantly, the overall number of productive tracts does not increase with the
cash flow in the year these tracts were bought. In other words, while higher
cash flow is associated with higher spending on these projects, higher cash flow
does not lead to higher revenues from these projects. Combining this finding
with the lack of a quantity response, we conclude that our results are best
described by an agency model where managers use cash flow to simplify their job
(or live a “quiet life”) rather than “empire-build.”
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