Financial flexibility is an emerging area of study both, in developing as well as developed economies. In previous studies, researchers examined the financial flexibility from various aspects and used its various measures, but there are some important aspects, which have not been examined yet. For example, there is no consensus regarding a well-defined measure of financial flexibility, what are the various internal and external determinants of financial flexibility? How financial flexibility can be affected by variation in corporate governance setting etc. The objectives of this study are to examine the various measures of financial flexibility to identify an appropriate measure, and to identify various factors that determine firms’ financial flexibility. These factors are categorized as firm specific financial, corporate governance characteristics and country specific dynamics. The moderating effects of ownership concentration, managerial ownership, group affiliation, life cycle stage and CEO duality were also studied.Several measures of financial flexibility, such low leverage, spare debt capacity, cash holdings, Altman z score, modified z score and cash flow volatility were used to identify and analyze firm and country specific factors. The examination of this study was carried out by using unbalanced panel data of 193 nonfinancial listed firms in Pakistan Stock Exchange. The panel logistic regression applied for analysis over the period of 1991 to 2014.The data was collected from the annual financial statements of firms, World Bank database and State Bank of Pakistan. This study also differentiated and categorized the different sources and measures of financial flexibility and found that financial flexibility in the form of low leverage, modified Altman z score, Altman z score, are the first, second and third best measures of financial flexibility.Spare debt capacity, cash flow volatility and cash holding are the remaining good measures of financial flexibility respectively. The findings of the study indicate that firm specific financial, corporate governance related non-financial factors and country specific factors affect the corporate financial flexibility.Firms strive to attain and maintain the financial flexibility. Among firm specific factors, size of firm, tangibility, dividend, and age of the firm are the most significant determinants of financial flexibility. Among country specific factors, interest rate, inflation, equity market development and banking sector development are significant determinants of financial flexibility.However, equity market development is more economically and statistically more significant than banking sector development. The moderating effect of ownership concentration, managerial ownership, group affiliation, life cycle stage of firm and CEO duality were also studied. It was found that these variables have direct impact on FF and they moderate the relationship between firm specific factors and financial flexibility.Among these moderator life cycle stages, managerial ownership, and group affiliation are the most significant moderating variables. Overall, this study provides the evidence that FF measured by low leverage, spare debt capacity, cash holdings, Altman z score, modified z score and cash flow volatility may be affected by firm specific and country specific factors.Among all proxies of financial flexibility, low leverage and spare debt capacity were the most important and significant measures and sources of financial flexibility.These results are robust across alternative measures of financial flexibility.