classify firms facing costly external financing. We also find that bidders generally retain target management, suggesting that …

research that uses cross-sectional differences in firm behavior to test for financing constraints on investment. This reply … employs misleading criteria to make unrealistically fine distinctions in the degree of financing constraints, and emphasizes … financial distress rather than financing constraints. Finally, econometric problems affect the interpretation of the KZ …

financing constraints cannot be rejected for firms with high (pre-sample) dividend payouts. However, it is decisively rejected … for firms with low (pre-sample) payouts (firms we expect to face financing constraints). Hem, investment is sensitive to …

determinant of investment spending, because of a "financing hierarchy," in which internal finance has important cost advantages …, and examine the importance of a financing hierarchy created by capital-market imperfections. Using panel data on … consistent with the augmented model we propose, which takes into account different financing regimes for different groups of …