Internal versus External Sources of Financing（内部和外部的融资来源）.pdf

This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Corporate Income Retention, 1915-43 Volume Author/Editor: Sergei P. Dobrovolsky Volume Publisher: NBER Volume ISBN: 0-870-14138-4 Volume URL: /books/dobr51-1 Publication Date: 1951 Chapter Title: Internal versus External Sources of Financing Chapter Author: Sergei P. Dobrovolsky Chapter URL: /chapters/c4835 Chapter pages in book: (p. 64 - 81) iNTERNAL VERSUS EXnIERNAL SOURCES OF FINANCING IN recent years considerable interest has centered on the relative im- portance of internal and external funds in financing corporate investment. Have corporations tended to increase the proportion of their investment expenditures which they meet out of retained income? Has retained income provided funds for financing varying proportions of corporate investment in the different phases of the business cycle? Clearly, answers to these questions are of paramount importance to our understanding of how the business system operates and how corporate financial policies affect economic stability. Data are presented in this chapter which suggest answers to both questions, but before considering this evidence it will be useful to discuss certain problems of definition. Two concepts of external financing are used, depending on whether the analysis is concerned with changes in total assets or with changes in physical assets only. In analyzing total asset changes, a measure is required of the additional amount of funds, debt or equity, obtained in the period in question from outside sources. Naturally, there is a certain netness in this amount, since a concern may, for example, use part of the proceeds of a stock issue to repay bank debt; however, interest centers only on the additional amount of outside funds obtained. The term external financing will be used to signify this amount. On the other hand, when physical