investment-cash flow sensitivity. First, we find that substitutability between reserved cash holdings and internal free cash flow … confirm that the level of net external financing can also partially explain the investment-cash flow puzzle. Lastly, by … examining the relationship between bank dependency and investment-cash flow sensitivity for recession and non-recession periods …

In this paper we describe a theoretical model of optimal investment of various types of financially constrained firms …. We show that the resulting relationship between internal funds and investment is non-monotonic. In particular, the … magnitude of the cash flow sensitivity of the investment is lower for firms with credit rationing compared to firms that are …

-equation model in which firms make interdependent decisions in financing, investment, and distribution, under the constraint that … and debt for R&D financing. R&D and physical capital investment are likely to be complementary for mature, but not for …

We investigate the effect of cash flow volatility on investment. Our evidence suggests that financially constrained … firms decrease investment (i) when experiencing persistently high volatility; (ii) when experiencing both high volatility …

The study of the investment-cash flow (ICF) sensitivity constitutes one of the largest literatures in corporate finance …&D investment and developments in equity markets have impacted ICF sensitivity estimates. We show that for the time period 1970 …-2006, the ICF sensitivity: i) largely disappears for physical investment, ii) remains comparatively strong for R&D, and iii …

In a standard q-theory model, corporate investment is negatively related to the cost of capital. Empirically, we find … that the weighted average cost of capital matters for corporate investment. The form of the impact depends on how the cost …