and

Using firm level estimates of investment-cash flow sensitivity, we find that cash flow sensitive firms are financially constrained and underinvest in low cash flow years, but are not constrained and overinvest in high cash flow years. The accessibility of external capital is positively correlated with cash flows, intensifying investment cash flow sensitivity. Managers actively counteract the variations in internal and external liquidity by accumulating working capital when liquidity is high and draining it when liquidity is low. While financial constraints have an economically significant impact on investment timing, cash flow sensitive firms alleviate their effects and, actually, overinvest, on aggregate