Sensitivity of External Finance Resources to Cash Flow under Financial Constraints: Replacement Role of Tangible Fixed Assets

This study investigates the relationship between cash flow and external finance by considering financial constraint as intervening variable. Sample includes companies listed in Tehran stock exchange from 2007 to 2012. Regression analysis is used to test hypothesis. Findings show that sensitivity of finance resources to cash flow is not significant in all sample firms. Sentivity of finance resources to replace fixed assets is different among financially constrained firms and unconstrained firms. In unconstrained firms، this sensitivity is not significant، but in financially constrained firms، as increasing of replacement of tangible fixed assets، borrowing is preferred to issue stocks.