Do adjustment costs explain investment-cash flow insensitivity?

I show how a dynamic model of firm investment with liquidity constraints and non-convex costs of adjustment of capital can explain these facts. These two features together imply that firms need to have a certain threshold level of financial resources before they can afford to increase investment. Once they cross this threshold, firms' investment will be positively correlated with their financial resources until they reach their desired level of capital stock. However, even if investment is sensitive to cash flow, firms may borrow below their credit limit to guard against future bankruptcy or binding liquidity constraints.