ABSTRACT
Introduction A high sensitivity of investment with respect to cash-flows is quite often related to financial constraints affecting firms. But recently, Kaplan et Zingales [1997] found that low dividend companies in the widely quoted Fazzari Hubbard and Petersen [1988] study can be split in several groups when taking into account additional and mostly qualitative information on the extent to which these firms were effectively facing a financial constraint. It turned out that their ‘financially constrained companies according to their new information’ were exhibiting a very low investment-cash-flow sensitivity with respect to the other low-dividends companies.
