Unexpected money growth, nonfinancial firms as large shareholders and investment-cash flow relationship: Evidence from Vietnam

This paper uses a sample of listed firms to raise questions as to how unexpected money growth affects firm-level investment in Vietnam, resembling tightening monetary policy impact. We find that most results that hold true in other countries also apply to Vietnamese firms during the years of our study. In particular, we find that higher cash flows are associated with higher investment when the assumption of tightening monetary policy is conducted, which is stronger in firms with external financial constraints. We also examine the impact of non-financial firm ownership and find that its presence reduces the investment impact of tightening monetary policy for affected firms. These results imply that the impacts of changes of the monetary stance on corporate investment seem to differ in a way that depends on cash flow and firm ownership characteristics.