Measuring financial constraints in an US Sample
Posted: 03 March 2016 03:24 PM   [ Ignore ]
Total Posts:  1
Joined  2016-03-03

Hello there,
i’m a complete newbie to WRDS/Compustat and glad i found this forum and can maybe get some help from here.

Im working on a project where i measure potential financial constraints in US companys in a sample from 2000-2015 with fundamental Data from Compustat.
As proxies for financial constraints i use firm size, firm age, leverage, dividends (yes/no variable), credit ratings (yes/no variable) and cash-to cash flow sensitivities.

firm size: i plan on using total assets (AT) as the variable

firm age: prcc_c /prcc_f and looking for the first year with data (as explained in other topics here). Or Is there any easier way to gain this info so that i only have to  
                                                                                                download data from the year 2000 onwards?

dividends: only using it as a yes/no (0/1) variable via DVT- dividends total

credit rating: would like to use it as a yes/no (0/1) variable, same like dividends , but no idea if there’s any code/variable that i can use?!

cash-to cash flow sensitivities: most complex . refers to the model of Almeida et al (2004), which predicts that constrained firms behavior towards Cash Holdings (CH-Cash/ total assets) increases with the rise of Cash Flow ( how to measure Cash Flow / increase in Cash Flow?)

Every suggestion and help on the whole topic is greatly appreciated.

Posted: 05 March 2016 05:16 PM   [ Ignore ]   [ # 1 ]
Total Posts:  901
Joined  2011-09-19

hi Tim,

Firm age could also be proxied by field year1 in Compustat Names

Probably the drawback would be that accounting data will be availble from the prospectus, where the first year is probably on the fiscal year a few years before the IPO.

Credit ratings: Company S&P Credit Ratings (ADSPRATE) (I haven’t used this before):

Cash and cash flow measures should be easy to find in Compustat Funda.




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