Investment, firm-specific uncertainty, and financial flexibility

We study how financial flexibility impacts on firm's investment decisions under uncertainty. use a comprehensive dataset covering US firms for the period 1983–2019. develop baseline model of uncertainty and characterize bindingness constraints. then this to explore firms’ responses in presence constraints different assumptions regarding value they assign flexibility. Our results point negative uncertainty-investment relationship constrained firms, withstanding impact relationship. This relationship, however, is less pronounced when higher (especially younger financially firms).