Abstract

To continue its activities, every business entity is in need of working capital and it is compulsorily urged to make new investments so as to develop its activities and increase profitability. These two requirements of a business entity, i.e. a working capital and a new investment, are supplied via financial resources. Therefore, supply of financial resources for making long-term investment constitutes a major part of the company managers’ worries. The objective of the present study is the investigation of the relationship between managers’ optimism (in the prediction of earning per share), financial constraints and investment sensitivity to cash flow. Due to the same reason, the data pertaining to the companies accepted to the stock exchange market for a time span from 2009 to 2014 were extracted and the pooled data regression pattern was applied to test the study hypotheses. Finally, the relationships between the financial constraints and the management’s optimism in earnings per share forecast and investment sensitivity to cash flow were confirmed but no significant relationship was found between the financial constraints and investment amount and operating cash flow.