This paper examines empirically the impact of financial flexibility on investment activities. Furthermore, we also investigate how financial flexibility determines the sensitivity of investment activities to cash flow. Using annual data of Indonesian manufacturing firms spanning five years, our analyses reveal that financial flexibility enhances investment ability and decreases sensitivity of investment activities to cash flow. Further analysis indicates that financially flexible firms in Indonesia tend to hold higher cash as a buffer to achieve financial flexibility. These findings yield important implications to managers and investors as Indonesia’s domestic market is expanding rapidly and large business opportunities are created. This condition provides firms with incentive to grow faster, hence increasing financing needs to finance firms’ expansion.

中文翻译：

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公司财务灵活性，投资活动和现金持有：来自印度尼西亚的证据

本文从经验上考察了财务灵活性对投资活动的影响。此外，我们还研究了财务灵活性如何确定投资活动对现金流量的敏感性。通过使用印度尼西亚制造企业五年的年度数据，我们的分析表明，财务灵活性可以增强投资能力，并降低投资活动对现金流量的敏感性。进一步的分析表明，印度尼西亚具有财务灵活性的公司倾向于持有较高的现金，以此作为实现财务灵活性的缓冲。随着印尼国内市场的快速发展和大量商机的出现，这些发现对管理人员和投资者产生了重要的影响。这种情况为企业提供了加快增长的动力，