<p>This study aimed to examine the impact of the cost of equity on the sensitivity of investment to cash flows by utilizing cross-sectional time series data (Panel Data). The sample consisted of 25 industrial companies listed on the Amman Stock Exchange (ASE) from 2010 to 2020, encompassing a total of 273 observations for these companies. To assess the sensitivity of investment to cash flows, the study relied on the dynamic neoclassical model. The capital asset pricing model (CAPM) was used to measure the cost of equity. Based on the multiple linear regression analysis, the study reached several key findings. Notably, it found that the cost of equity does not have a statistically significant effect on the sensitivity of investment to cash flows in Jordanian industrial companies. At the same time, there is a statistically significant impact of the cash flows on the investments of Jordanian industrial companies. However, the results indicated a statistically significant effect of cash flow on the investments of these companies. Additionally, the study examined other explanatory variables, including company size and profit distribution percentage. It found no statistically significant effect of the company’s size on the investments of industrial companies. In contrast, profit distribution percentage was found to have a negative, statistically significant impact on the investments of Jordanian industrial companies. These findings highlight the importance of internal financing during restricted markets. Therefore, the study suggests that it is preferable to develop internal financing schemes and increase the openness of capital markets to alleviate financial constraints and stimulate industrial investment in Jordan.</p>