What happened to the willingness of companies to invest after the financial crisis? Evidence from Latin American Countries

Aydin Ozkan, Roberto J. Santillán-Salgado, Yilmaz Yildiz, María del Rocío Vega Zavala

Research output: Contribution to journalArticle


In this article we investigate the changes in corporate investment dynamics in the aftermath of the global financial crisis. Using firm-level data from six Latin American countries from 2002 to 2015, we show that firms are less constrained and have greater ability to invest after the crisis. However, the willingness of firms to invest optimally is reduced. This is supported by strong evidence that during the postcrisis period investment–cash flow sensitivity disappears, investment-q sensitivity increases, and the estimated speeds of adjustment for target investment decrease. Moreover, after the crisis, firms notably increase their efforts to attain optimal cash and leverage levels. Our analysis implies that firms may not always be willing to invest optimally. The willingness to invest optimally appears to be time variant and moves together with the dynamics of cash and leverage policies, albeit in opposite directions.

Original languageEnglish
Number of pages32
JournalJournal of Financial Research
Early online date5 Feb 2020
Publication statusE-pub ahead of print - 5 Feb 2020


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