Financial constraints hypothesis based on the cash flow sensitivity of cash Both is tested by some researchers，but their opinions are different each other．This paper reviews this question from the viewpoints of modeling specification error, measurement error and endogeneity error. The results show that, the endogeneity of cash flow and Tobin’s Q induce the result biases of two papers．Controlling the endogeneity of two variables by using the GMM，we find that financial constrained firms significantly exhibit cash flow sensitivity of cash，while the non—financial constrained firms do not.We conclude that the results support the financial constraints hypothesis, and the cash flow sensitivity of cash can be used to test the financial constraints hypothesis．

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