V-Type Relationship between Firm Growth and Cash Flow: Evidence from Quantile Regression

Abstract

We use Taiwan's firm-level data to investigate the impact of liquidity constraints on firm growth and apply a quantile regression model to focus on the differences between firms in different quantiles of distribution. The quantile regression model shows that cash flow is important for firm growth and exhibits V-type growth-cash flow sensitivities for different quantiles of growth distribution.

Keywords:

• Quantile regression model
• Firm growth
• Liquidity constraints

JEL classification:

• L11
• C23
• G32