investment-cash flow sensitivity as a metric to represent finance constraint of firms can be misleading. This is because cash … flow apart from signaling change in net worth may also signal investment opportunities of firms. Following Hovakimian and … investment opportunities unless they are financially constrained. We study private Indian manufacturing firms in the period 1994 …

The paper develops a model of firm´s investment under uncertainty with financial market imperfections and analyzes the … effects of financial constraints on firm´s investment. Firm´s investment is an increasing function of the firm´s marginal q …, however the investment function is characterized by an upper bound that depends on the firm´s borrowing capabilities. The firm …