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The connection between finance and investment starts with any violation of the modigliani-miller theorem (modigliani and miller, 1958), usually modelled formally via imperfect information. According to ross, westerfield and jordan (1993) about 80 per cent of all financing is done with internally generated funds. Explanations for this behaviour usually highlight the role of information asymmetries (myers and majluf, 1984) and agency issues ( jensen and meckling, 1976) in raising the costs of external funds.keywordscash flowfinancial constraintoptimal contractlink internalexternal organizationthese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.