Decreasing investment-cash flow sensitivity: Further UK evidence

•Investment-cash flow sensitivity (ICFS) is disappearing in the UK.•ICFS is decreasing for constrained and unconstrained firms even during the crisis.•The usefulness of ICFS as a proxy of financial constraints is diminishing over time. Using publicly listed firms in the UK, we examine the time-series variation of investment-cash flow sensitivity after directly controlling for future growth opportunities in cash flow, which if overlooked, as in the literature, could bias inferences. We find that investment-cash flow sensitivity is disappearing over time, even for constrained firms during the global financial crisis when credit constraints were more significant or binding. Our results not only confirm the decline in investment-cash flow sensitivity that is not explained by factors so far identified in the literature but also its diminishing usefulness as a proxy of financial constraints.