This paper studies the interplay between firm investment and cash flow hedging decisions when the decision-maker has time-inconsistent preferences. We show that cash flow hedging acts as a double-edged sword. In some cases, cash flow hedging enhances firm value because the firm can thus invest...

I employ a dynamic multi-equation model in which firms make interdependent financing and investment decisions under the constraint that sources and uses of cash must be equal. In this setting, R&D-cash flow sensitivities for young and mature high-tech firms are both small and indistinguishable...

We examine firms' simultaneous choice of investment, debt financing and liquidity in a large sample of US corporates between 1980 and 2014. We partition the sample according to the firms' financial constraints and their needs to hedge against future shortfalls in operating income. In contrast to...

We investigate the association between financial constraints and cash savings generated through tax planning. We predict that an increase in financial constraints leads firms to increase internally-generated funds via tax planning. We measure financial constraints based on changes in...