Financial factors can significantly impact business fluctuations. A new study suggests that market imperfections can lead to volatility in businesses. The researchers developed a model showing how financial factors can affect investment decisions. They found that the relationship between sales variability and company size may be influenced by financial, not just technological, factors. Additionally, they discovered that capital market frictions have a greater impact on investment during recessions than booms. These findings highlight the importance of considering financial aspects in understanding fluctuations in business activity.