• Scheme #1. Finn Size: we rank fir

• Scheme #1. Finn Size: we rank firms on the basis of size, using logarithm of total assets as a proxy, and assign to the financially constrained (unconstrained) group those firms whose size lies below 45th percentile (above 55th percentile) in the sample. The intuition here is the smaller firms are more likely to be financially constrained as they are subject to greater asymmetric information and. therefore, they have difficulties when accessing to the external finance. Thus, smaller firms likely to hold more cash because there are economies of scale in cash management. Almeida. Campello. and Weisbach (2004). Hovakimian and Titman (2006) and Acharya. Almeida, and Campello (2007) find that small firms are more likely to be financially constrained.