Investment Efficiency through Compensation Schemes Based upon Free Cash Flow

1999 ◽  
Author(s):  
Enrique R. Arzac
Keyword(s):  
Cash Flow ◽  
Free Cash Flow ◽  
Investment Efficiency

scholarly journals CORPORATE GOVERNANCE, INSTITUSIONAL OWNERSHIP, FREE CASH FLOW AND INVESTMENT EFFICIENCY: EVIDENCE OF INDONESIAN AGRICULTURE FIRM

2021 ◽  
Vol 1 (2) ◽  
pp. 355-364
Author(s):  
Darmawati Muchtar ◽  
Iswadi Bensaadi ◽  
Ratna Husein ◽  
Azhari Abdul Gani
Keyword(s):  
Corporate Governance ◽  
Cash Flow ◽  
Firm Value ◽  
Audit Committee ◽  
Stock Exchange ◽  
Investment Decision ◽  
Free Cash Flow ◽  
Investment Efficiency ◽  
Board Size ◽  
Agriculture Sector

The purpose of this study is to examine the determinants of investment efficiency with focuses on corporate governance, ownership structure, audit committee and free cash flow as the main factor. The 17 firms of Agriculture sector were selected as the sample from 2007 to 2019, hence this study have an unbalance panel data with total of 178 observations. The listed firm of Agriculture sector still slightly compared to others sectors in Indonesia Stock Exchange. Panel fixed effect model estimation was employed to test the relationship and hypotheses developed. The results show that board size has positive and significant effect on investment efficiency and contrary result to board of commissioners, it has negative insignificant. This indicates that large board size lead to increase the investment decision at optimal level. Moreover, the Audit committee and institutional ownership seem to have negative effect and significantly on investment efficiency. This means that when firms increase the number of audit committee and also the portion of share is owned by institution would lead to decrease investment efficiency. However, free cash flow have positive and significantly affect investment efficiency. This finding supports the expected hypothesis, which is increase the FCF lead to increase the investment efficiency and in this case, the managers act to maximize the firm value.

scholarly journals Financial Constraints and Cost of Equity: Empirical Study of Shariah Compliant Firms in Indonesia

2019 ◽  
Vol 10 (3) ◽  
pp. 371
Author(s):  
Diana Hashim Syarif ◽  
Sugeng Wahyudi ◽  
Irene Rini Demi Pangestuti
Keyword(s):  
Cash Flow ◽  
Financial Constraints ◽  
Equity Capital ◽  
Free Cash Flow ◽  
Investment Efficiency ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Capital Costs ◽  
Financial Characteristics ◽  
The Cost

This study is to investigate the relationship between financial characteristics and the cost of equity capital from sharia-based companies, which tend to be financially constrained. Using 276 observations, the results of this study indicate that financial constraints which are proxied by free cash flow have a role in influencing the cost of equity capital. This study also builds an indirect relationship of free cash flow and capital costs by proposing investment efficiency as a mediator variable. By using the causal step approach from Baron and Kenny, the test results show that investment efficiency mediates the effect of free cash flow on the cost of equity capital with an indirect effect that is stronger than the direct effect. This study also found evidence that leverage has no role in strengthening the effect of free cash flow on the cost of equity capital.

scholarly journals Free Cash Flow and Investment Efficiency of Listed Manufacturing Companies in Nigeria

2021 ◽  
Vol 4 (4) ◽  
pp. 77-88
Author(s):  
Aliyu Sulaiman Kantudu ◽  
Abubakar Sadiq Umar
Keyword(s):  
Cash Flow ◽  
Manufacturing Sector ◽  
Sampling Technique ◽  
Equity Capital ◽  
Free Cash Flow ◽  
Cost Of Debt ◽  
Investment Efficiency ◽  
Manufacturing Companies ◽  
The Relationship ◽  
Practical Implications

Purpose- This study aims to determine the relationship between free cash flow and investment efficiency of quoted manufacturing companies in Nigeria. Design- An accounting-based model developed by Richardson (2006) was employed to measure investment efficiency and free cash flow. The population of the study consist of all the listed manufacturing companies in Nigeria. Similarly, the purposive sampling technique was employed to arrive at forty-eight companies for 2008-2018. Findings- The results of the study confirm the agency theory of free cash flow. Hence, it established that there is a positive and robust relationship between free cash flow and overinvestment. Practical Implications- the findings of this study has practical implications to various group of users of financial information such as investors, policymakers and other stakeholders in the listed manufacturing sector in Nigeria. The study recommends that policymakers reduce the cost of debt, and likewise, managers should emphasize the facilitation of equity capital. Originality- To the best of the researcher's knowledge, this is the first study to examine the relationship between free cash flow and investment efficiency in Nigeria.

Dividend Payout Ratio: Persoalan Free Cashflow, Debt To Equity Ratio, Kepemilikan Institutional, Investment Opportunity, Dan Kesejahteraan Karyawan

Liquidity ◽  
2017 ◽  
Vol 6 (1) ◽  
pp. 1-11
Author(s):  
Nurlis Azhar ◽  
Helmi Chaidir
Keyword(s):  
Cash Flow ◽  
Significant Influence ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Free Cash Flow ◽  
Manufacturing Companies ◽  
Flow Ratio ◽  
Prediction Ability ◽  
Employee Welfare ◽  
Equity Ratio

This study was conducted to examine the effect of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (Parliament) partially on manufacturing companies listed on Indonesia Stock Exchange period 2011-2015. In addition, to test the feasibility of regression model, the influence of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (DPR) simultaneously at manufacturing company listed on Bursa Indonesia Securities period 2011-2015. The population in this study are 146 manufacturing companies that have been and still listed in Indonesia Stock Exchange period 2011-2013. The sampling technique used was purposive sampling and obtained sample of 42 companies. Data analysis technique used is by using multiple linear regression test. The results showed that Free Cash Flow Ratio, no significant effect on Divident Payout Ratio (DPR). Debt Equity Ratio (DER) has a negative and significant influence on Divident Payout Ratio (DPR), Institutional Ownership has a significant positive effect on Divident Payout Ratio (DPR), Employee Welfare and Price Earning Ratio (PER) has a positive and significant influence on the Divident Payout Ratio ). Simultaneously Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) give effect to Divident Payout Ratio. The prediction ability of the five variables to the Divident Payout Ratio (DPR) is 21.3% as indicated by the adjusted R square of 0.271 while the remaining 79.7% is influenced by other factors not included in the research model.

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