How can the influence of a company's liquid asset holdings on its investment decisions be theoretically explained? While ideally, there is no dependency in theory, this is very relevant in practice due to ubiquitous frictions. Stefan Hirth demonstrates within a dynamic modeling framework that both delays and accelerations in investments can be explained as a result of high or low liquid asset holdings. He clarifies that, in addition to financing constraints, another friction may be responsible: conflicts of interest between equity and debt providers. The developed model has implications for the design of financing contracts.