The revised criteria for the classification of rheumatoid arthritis (RA) were formulated from a computerized analysis of 262 contemporary, consecutively studied patients with RA and 262 control subjects with From the Rheumatoid Arthritis Criteria Subcommittee of the Diagnostic and Therapeutic Criteria Committee of the American Rheumatism Association.
No. This paper investigates the relationship between nancing constraints and investment-cash ow sensitivities by analyzing the rms identi ed by Fazzari, Hubbard, and Petersen as having unusually high investment-cash ow sensitivities. We nd that rms that appear less nancially constrained exhibit signi cantly greater sensitivities than rms that appear more nancially constrained. We nd this pattern for the entire sample period, subperiods, and individual years. These results (and simple theoretical arguments) suggest that higher sensitivities cannot be interpreted as evidence that rms are more nancially constrained. These ndings call into question the interpretation of most previous research that uses this methodology.
"Our nancial position is sound . . . Most of the company's funds are generated by operations and these funds grew at an average annual rate of 29% [over the past 3 years]. Throughout the company's history this self-nancing concept has not been a constraint on the company's growth. With recent growth restrained by depressed economic conditions, the company's net cash position has grown substantially" [Hewlett-Packard 1982 Annual Report].A large nance and macroeconomics literature studies the relation between corporate investment and cash ow to test for the presence and importance of nancing constraints. Beginning with "Financing Constraints and Corporate Investment" by Fazzari, Hubbard, and Petersen [1988], (hereinafter FHP [1988]), these studies divide a sample of rms according to an a priori measure of nancing constraints and compare the investment-
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