Impacts of equity financing on liquidity position of a firm

Author: Mehar Ayub  

Publisher: Routledge Ltd

ISSN: 1466-4305

Source: Applied Financial Economics, Vol.15, Iss.6, 2005-03, pp. : 425-438

Disclaimer: Any content in publications that violate the sovereignty, the constitution or regulations of the PRC is not accepted or approved by CNPIEC.

Previous Menu Next

Abstract

It is concluded in the study that equity financing plays a central role in determination of the liquidity position of a firm. A ‘U-shaped' relation between the equities and working capital has been observed, in the long-term. While, depreciation fund has been classified as a source of liquidity. It is the important conclusion that long-term debt may deteriorate the liquidity position of a firm. The study is based on a simulation analysis and 225 listed companies of the Karachi Stock Exchange are included in the model.