The Comparative Investigation of the Relationship between Internal and External Financial Constraints in Leveraged and Capital-Intensive Companies in Tehran Stock Exchange (TSE)
Saeid Jabbarzadeh Kangarlouei, Reza Sanatkar, Morteza Motavassel

Abstract
The aim of this study is to compare the relationship between internal and external financial constraints in leveraged and capital-intensive companies in TSE. Firm's size index (total assets) is considered as a proxy for external constraint and operating cash flows is a proxy for internal constraint. Total sample firms are 138 firms during the period of 2005 to 2010 which calculating firms total debt ratio are separated into two groups of leveraged (62 firms) and capitalized (76 firms) firm (firms with debt ratio more than debt ratio of total sample is considered as leveraged firms, capital-intensive companies otherwise). T-statistic and ordinary least square (OLS) are used to test hypotheses. The results of T-statistic in leveraged firms show positive effect of firm's size and operating cash flow and neutral effect of sale and equity capital on capital assets investment and in capital-intensive companies indicate positive effect of firms size and equity capital and negative effect of operating cash flow and neutral effect of sale on equity capital. In addition, the results of OLS estimation after testing the reliability of all variables by … in both leveraged and capital-intensive companies demonstrate negative and significant relationship between operating cash flow (internal financial constraint) and capital assets investment and less internal financial constraint leads to more investment sensitivity to cash flow.

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