of internal finance. Second, the KZ regression results (lower sensitivity of investment to cash flow for firms classified … possibly self- serving managerial statements that may present a distorted picture of firm's availability of finance. It also …

would otherwise. It does so in two respects: First, it provides a relative subsidy to debt finance; second, it restricts …

determinant of investment spending, because of a "financing hierarchy," in which internal finance has important cost advantages … over external finance. We build on recent research concerning imperfections in markets for equity and debt. This work … ability to raise funds externally, investment spending may be sensitive to the availability of internal finance. That is …