Capital market imperfections, uncertainty and corporate investment in the Czech Republic

In this study we examine private investment behavior of firms in the Czech Republic. A special feature of the study is that the investment equations i nclude variables which may give some more insights into the role of capital market imperfections as well as the effect of uncertainty. Our results fin d support for the accelerator model. We find evidence for cash-flow effects on Czech corporate investment. It is striking that indeed smaller longer p rivatized firms face relatively less cash flow restrictions. Financial stru cture doesn't matter as much as we expected. We find that smaller firms rea ct positively to more uncertainty.