Title: The Impact of Global Financial Crisis on Corporate Investment in France
Author(s) : Trevor Chamberlain, Jacques Chancel Voukeng Fosso
This study investigates the impact of the 2008 global financial crisis on the investment behaviour of publicly traded firms in France. France is an interesting case to examine because the French government moved more quickly than the governments of other European nations to fight the recession. The study focusses in particular on the role of cash reserves held by firms prior to the crisis and of financial Constraints during the crisis. Using fixed effects panel regressions, the study finds, as expected, firms reduced their investments following the onset of the recession and that cash reserves mitigated the effects of the recession. In addition, financial constraints, measured by size, leverage and dividend payout, aggravated the effects of the recession on firm investment. Financially-constrained firms were affected more than non-financially-constrained firms.