Law and Economics Workshop: Kate Litvak

12/2

Open to the public

The University of Chicago Law School and the Coase-Sandor Institute for Law and Economics welcome Kate Litvak, Professor of Law at Northwestern University School of Law.

Professor Litvak will explore findings in her paper, Investment - Cash Flow Sensitivity Is Not Caused by Financial Constraint: New Evidence From a Randomized SEC Experiment.

The sensitivity of firm’s investment to cash flows is one of the grand unresolved puzzles of corporate finance. This sensitivity could be caused by a firm’s financing constraints (and therefore reveal imperfections in capital markets), by agency problems, or by non-problematic factors. Prior papers have not been able to disentangle these causal relationships because the firm’s financing constraints, investment, and cash flows are endogenous.