Almeida, Heitor; Campello, Murillo; Weisbach, Michael S. - In: Journal of Finance 59 (2004) 4, pp. 1777-1804
We model a firm's demand for liquidity to develop a new test of the effect of financial constraints on corporate policies. The effect of financial constraints is captured by the firm's propensity to save cash out of cash flows (the "cash flow sensitivity of cash"). We hypothesize that...