Pre-IPO Cash Flow Volatility and Aftermarket Valuation

2017 ◽  
Author(s):  
Justin S. Cox
Keyword(s):  
Cash Flow ◽  
Cash Flow Volatility

Cash Flow Volatility and Corporate Bond Yield Spreads

2008 ◽  
Author(s):  
Kenneth R. Vetzal ◽  
Alan V. S. Douglas ◽  
Alan Guoming Huang
Keyword(s):  
Cash Flow ◽  
Corporate Bond ◽  
Yield Spreads ◽  
Bond Yield ◽  
Cash Flow Volatility

Does Financial Reporting Conservatism Mitigate Underinvestment?

2017 ◽  
Vol 34 (2) ◽  
pp. 258-283 ◽  
Author(s):  
Hyun A. Hong ◽  
Yongtae Kim ◽  
Gerald J. Lobo
Keyword(s):  
Information Asymmetry ◽  
Cash Flow ◽  
Financial Reporting ◽  
Cash Flows ◽  
Agency Conflicts ◽  
Negative Relation ◽  
Investment Projects ◽  
External Capital ◽  
Cash Flow Volatility

This study examines the role of financial reporting conservatism in mitigating underinvestment problems. Recognizing that volatile cash flows increase the need to access external capital markets and that agency conflicts and information asymmetry make external capital costlier than internal capital, which leads managers to forgo valuable investment projects, Minton and Schrand document a negative relation between cash flow volatility and investment. We draw on Minton and Schrand’s framework to isolate underinvestment problems and hypothesize and document that conservatism mitigates the negative relation between cash flow volatility and investment and that this mitigative effect is more pronounced for firms with ex ante more severe agency conflicts. We also document that conservatism mitigates the sensitivity of investment to cash flow volatility by facilitating access to external capital.

scholarly journals Role of Hedging Mechanism in Maintaining Volatility Cash Flow and Growth Opportunity and Their Impact on Investor Reaction

2020 ◽  
Vol 15 (1) ◽  
pp. 23
Author(s):  
Hartono Hartono ◽  
Oktavianus Pasoloran ◽  
Fransiskus Eduardus Daromes
Keyword(s):  
Path Analysis ◽  
Cash Flow ◽  
Stock Exchange ◽  
Improve Performance ◽  
Investor Confidence ◽  
Growth Opportunity ◽  
Forward Contract ◽  
Cash Flow Volatility ◽  
Investor Reaction

This study aims to investigate the role of forward contract hedging in maintaining volatility cash flow and growth opportunity and its impact on investor reaction. The population in this study included 242 non-financial companies listed on the Indonesia Stock Exchange from 2013–2017. The sample was determined using purposive sampling, and path analysis was employed to analyze the data. Results show that forward contract hedging mediates the effects of volatility cash flow and growth opportunity on investor reaction. This research is expected to provide insights so that company management can improve performance properly and increase investor confidence through the application of hedging, thereby maintaining volatility cash flow and growth opportunity. Keywords: Cash flow volatility, growth opportunity, hedging forward contract, investor reaction.

scholarly journals The Determinant Factors of Earnings Persistence

2022 ◽  
Vol 4 (1) ◽  
Author(s):  
Mia Oktavia ◽  
Yulius Kurnia Susanto
Keyword(s):  
Cash Flow ◽  
Sampling Method ◽  
Stock Exchange ◽  
Regression Method ◽  
Earnings Persistence ◽  
Operating Cycle ◽  
Multiple Regression Method ◽  
Cash Flow Volatility ◽  
Operating Cash Flow ◽  
Research Show

The purpose of this research is to provide empirical evidence about the effect of operating cash flow, sales volatility, cash flow volatility, operating cycle, and book tax difference on earnings persistence. The company used in this research is manufacturing company listed in Indonesia Stock Exchange (IDX) from 2016 until 2020. Samples of this research were selected based on the purposive sampling method and resulted in 43 companies, therefore the data used for this research amounting to 215 data. The data obtained from these samples were analyzed using multiple regression method. The result of this research show that operating cycle have influence on earnings persistence. While operating cash flow, sales volatility, cash flow volatility, and book tax difference have no influence on earnings persistence.

The impact of cash flow volatility on firm leverage and debt maturity structure: evidence from China

2018 ◽  
Vol 8 (1) ◽  
pp. 69-91 ◽  
Author(s):  
Zulfiqar Ali Memon ◽  
Yan Chen ◽  
Muhammad Zubair Tauni ◽  
Hashmat Ali
Keyword(s):  
Standard Deviation ◽  
Cash Flow ◽  
Cash Flows ◽  
Debt Maturity ◽  
Percent Reduction ◽  
Content Type ◽  
Debt Maturity Structure ◽  
Maturity Structure ◽  
Cash Flow Volatility

Purpose The purpose of this paper is to investigate the influence of cash flow volatility on firm’s leverage levels. It also analyzes how cash flow volatility influences the debt maturity structure for the Chinese listed firms. Design/methodology/approach The authors construct the measure for cash flow variability as five-year rolling standard deviation of the cash flow from operations. The authors use generalized linear model approach to determine the effect of volatility on leverage. In addition, the authors design a categorical debt maturity variable and assign categories depending upon firm’s usage of debt at various maturity levels. The authors apply Ordered Probit regression to analyze how volatility affects firm’s debt maturity structure. The authors lag volatility and other independent variables in the estimation models so as to eliminate any possible endogeneity problems. Finally, the authors execute various techniques for verifying the robustness of the main findings. Findings The authors provide evidence that higher volatility of cash flows results in lower leverage levels, while the sub-sampling analysis reveals that there is no such inverse association in the case of Chinese state-owned enterprises. The authors also provide novel findings that irrespective of the ownership structure, firms facing high volatility choose debt of relatively shorter maturities and vice versa. Overall, a rise of one standard deviation in volatility causes 8.89 percent reduction in long-term market leverage ratio and 26.62 percent reduction in the likelihood of issuing debentures or long-term notes. Research limitations/implications This study advocates that cash flow volatility is an essential factor for determining both the debt levels and firm’s term-to-maturity structure. The findings of this study can be helpful for the financial managers in maintaining optimal leverage and debt maturity structure, for lenders in reducing their risk of non-performing loans and for investors in their decision-making process. Originality/value Existing empirical literature regarding the influence of variability of cash flows on leverage and debt maturity structure is inconclusive. Moreover, prior research studies mainly focus only on the developed countries. No previous comprehensive study exists so far for Chinese firms in this regard. This paper endeavors to fulfill this research gap by furnishing novel findings in the context of atypical and distinctive institutional setup of Chinese firms.

scholarly journals The Determinants of Corporate Cash Holdings: The Case of a Small Emerging Market

2016 ◽  
Vol 8 (1) ◽  
pp. 143
Author(s):  
Ghada Tayem
Keyword(s):  
Cash Flow ◽  
Emerging Market ◽  
Cash Holdings ◽  
Estimation Methods ◽  
Dynamic Effects ◽  
Growth Opportunities ◽  
Trade Off ◽  
Cash Flow Volatility ◽  
Cash Reserves ◽  
Corporate Cash Holdings

This study investigates the factors influencing the level of corporate cash holdings in the context of Jordan, a small emerging market characterized by large market frictions. This article employs the framework of the trade off, financing hierarchy, and managerial discretion theories to predict determinants of cash reserves. Then it examines these predictions using a sample of listed nonfinancial Jordanian firms over the period 2005-2013 using alternative estimation methods. Consistent with the trade-off theory, the results show that firm size and cash substitutes have negative and significant impact on cash holdings while growth opportunities and cash flow volatility have positive and significant impact. In addition, and consistent with the financing hierarchy view, the results show that cash flow and growth opportunities have positive and significant impact on cash holdings. Also, the study documents that leverage is negatively related to cash holdings while squared leverage is positively related to cash reserves. Finally, the results indicate that there are significant dynamic effects in determining cash holding targets.

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