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Prior studies find a positive relationship between a firm’s cash flow and investment, but researchers disagree over whether this finding can be attributed to financial constraints. In this paper we introduce two new ways to segment firms to test for differences in cash–investment relationships. Our findings suggest that relationships between internal cash and investment are more complex than prior studies assume. Internal liquidity plays a more important role in the investment process in some industries than in others. Attempts to generalize a theory for investment decisions based on internal cash holdings must account for differences in both industry and internal cash constraints.