We contribute to the financial constraints literature and the investment-cash flow sensitivity debate by defining a new …-level employment growth as a control for investment opportunities, we find that constrained firms display the highest investment …

This paper investigates the link between corporate debt and investment for a group of five peripheral euro area … countries. Using firm-level data from 2005-2014, we postulate a non-linear corporate leverage-investment relationship and derive … thresholds beyond which leverage has a negative and significant impact on investment. The investment sensitivity of debt …