M.A. Thesis:

Investigating the Relevance of Cash Flow Investment Sensitivity and Financing Method in Firm Given the Moderating Role of Financial Constraint

Abstract One of the most important decisions facing business unit managers is financing decisions. Financing is one of the essential components of any business unit's operations. Adoption of financing policies by managers plays a significant role in risk and wealth creation for shareholders. However, recognizing the factors influencing managers' financing decisions is more important. The main purpose of this study is to investigate the relationship between cash flow investment sensitivity and financing method in the company with respect to the moderating role of financial constraints based on capital market evidence. This study takes a step with the approach of factors affecting foreign and domestic financing in companies. In order to develop the literature on the subject and scientific aspect of this research, it is expected that in line with previous research based on capital market documents, it will be shown whether the effect of cash flow investment sensitivity on financing companies can be different due to the role of financial constraints. Is it? The present study was conducted with an applied approach and descriptive-correlation method of post-event type using the information of 143 companies from Tehran Stock Exchange companies. In this study, the hypotheses were tested using multiple regression based on 1144 observations from year-companies collected during the period 2011 to 2018 using R statistical software. In testing the hypotheses at the expected error level (five percent), the results of the hypothesis test indicated that Hypothesis 1: There is a significant relationship between the sensitivity of cash flow investment and external financing. Hypothesis 2: There is no significant relationship between cash flow investment sensitivity and domestic financing. Hypothesis 3: Financial constraints have a significant effect on the relationship between cash flow investment sensitivity and external financing. Hypothesis 4: Financial constraints have no significant effect on the relationship between cash flow investment sensitivity and domestic financing. In summary, the results of this study were placed in meaningful hypotheses in line with previous research.

Keywords: Keywords: Cash Flow Investment Sensitivity, Financing, Financial Constraint.