Cleary, Sean; Povel, Paul; Raith, Michael - In: Journal of Financial and Quantitative Analysis 42 (2007) 01, pp. 1-39
We analyze how the availability of internal funds affects a firm's investment. We show that under fairly standard assumptions, the relation is U-shaped: investment increases monotonically with internal funds if they are large but decreases if they are very low. We discuss the tradeoff that...