scholarly journals The Impact of Free Cash Flows to the Financial Flexibility of the Banks listed in the Colombo Stock Exchange

2021 ◽  
pp. 23-27
Author(s):  
Nadhira .. ◽  
◽  
◽  
Maha Saad Metawea
Keyword(s):  
Ownership Structure ◽  
Positive Relationship ◽  
Stock Exchange ◽  
Investment Decisions ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Panel Regression ◽  
Financial Flexibility ◽  
Free Cash Flows ◽  
The Impact

There are considerable arguments in favour of and against the positive relationship between free cash flows (FCF) and financial flexibility. The aim of the study is to determine the impact of free cash flows on the financial flexibility of the banks listed in the Colombo Stock Exchange (CSE). The free cash flow will measure according to the model in Journal of Finance: Agency costs and ownership structure in 2000 and financial flexibility will determine using the financial leverage based on the model captured according to the Accounting Horizons Journal: Financial flexibility and investment decisions in 2007 . The population of the study is the banks listed in the CSE. The sample consists of 60 observations covering 12 banks for a period of over 05 years from 2015 to 2019. The panel regression model has been used to test hypotheses. The results indicate that there is a positive significant relationship between free cash flows and the financial flexibility of the banks listed in CSE.

scholarly journals A test of audit committee characteristics and free cash flows

2013 ◽  
Vol 10 (2) ◽  
pp. 611-626 ◽  
Author(s):  
Samuel Jebaraj Benjamin ◽  
Kiarash Ehtiat Karrahemi
Keyword(s):  
Agency Theory ◽  
Cash Flow ◽  
Audit Committee ◽  
Positive Relationship ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Transaction Cost Theory ◽  
Pecking Order ◽  
Free Cash Flows ◽  
The Impact

The study concentrates on audit committee characteristics and their influences on free cash flow. A panel of 120 firms from the trading and services industry from the year 2005 to 2008 is examined. The results show a significant and positive relationship between Audit Committee characteristics (size, independence, frequency of meetings) and free cash flows. These findings suggest that effective audit committee governance leads to availability of higher free cash flows. Our study draws upon the lack of understanding on the impact of audit committee characteristics on free cash flow along the two views; agency theory and pecking order/transaction cost theory and finds support for the later.

scholarly journals Interactions between free cash flow, debt policy and structure of governance: Three stage least square simultaneous model approach: evidence from the Tunisian stock exchange

2012 ◽  
Vol 9 (2) ◽  
pp. 21-40 ◽  
Author(s):  
Ben Moussa Fatma ◽  
Jameleddine Chichti
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Least Square ◽  
Agency Conflicts ◽  
Governance Mechanism ◽  
Free Cash Flows ◽  
Debt Policy ◽  
Simultaneous Model

This research tests the efficiency of the ownership structure and the debt policy as mechanism of resolution of agency conflicts between shareholders and managers due to the problem of overinvestment, in the limitation of the problem of the free cash flow, by estimating three stage least square simultaneous model and on the basis of a sample of 35 non-financial Tunisian listed companies selected for the period 1999–2008. Our results are in favour of the theory of free cash flows of Jensen (1986) that stipulates that the debt policy represents the principal governance mechanism that can limit the risk of free cash flow. However, the ownership concentration and managerial ownership increase the risk of the free cash flow.

scholarly journals The Role of Dividend Payout in the Determination of the Relationship Between Earnings Before Interest and Tax Cash Flow From Operations, Capital Expenditures and Firm Sustainable Cash Flows: A Case Of Non-Financial Firms

2018 ◽  
pp. 382-390
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Predictive Ability ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Capital Expenditures ◽  
Dividend Payout ◽  
Financial Firms ◽  
Free Cash Flows

The prime objective of the current study is to determine the predictive ability to earnings before interest and tax, cash flow from operations, dividend payout, and capital expenditures for free cash flows. In addition to the current study is also intended to highlight the moderating role of dividend payout predictive ability to earnings before interest and tax, cash flow from operations, and capital expenditures for free cash flows. To achieve the objective of the study the data of 100 listed non-financial firms are collected from the annual report of the firms listed on the Iraq Stock Exchange. The data is collected over a period of six years from 2012-2017. To achieve the first set of objective regarding the direct results we have chosen OLS as a final statistical test after undergoing basic diagnostic analysis. To achieve the second set of objectives regarding the indirect effect of dividend payout, we have used the hierarchical multiple regression models.The statistical software, STATA is used for the analysis purpose. The findings of the study have shown a great deal of agreement with hypothesized results and also provided support to the pecking order theory and theory of free cash flow. The findings of the study will be helpful for policymakers, investors, scholars, and students in understanding the key factors which affect the free cash flow decisions and determine its predictability.

scholarly journals Impact of Elimination of Dividend Distribution Tax on Indian Corporate Firms amid COVID Disruptions

2021 ◽  
Vol 14 (9) ◽  
pp. 413
Author(s):  
Anshu Agrawal
Keyword(s):  
Financial Performance ◽  
Stock Exchange ◽  
Cash Flows ◽  
Market Capitalization ◽  
Factors Associated ◽  
Financial Firms ◽  
Dividend Payments ◽  
Dividend Distribution ◽  
Free Cash Flows ◽  
The Impact

Economic fallouts from COVID-19 have been unprecedented across all industries, with a handful of exceptions. The present study attempts to capture the impact of dividend distribution tax elimination, introduced through the Indian Finance Act 2020, on corporate dividend behavior in India. It explores the determinants of dividend payouts, changing payout decisions, dividend behavior of regular payers, and the prevalence of factors associated with changing payouts. Out of the top 1000 firms, based on their market capitalization at the Bombay Stock Exchange, 509 non-financial firms pursuing consistent dividend payments from 2015 to 2019 are analyzed. The study also examines the dividend behavior of regular payers exhibiting a stable or step-up payout from 2015 to 2019. COVID’s impact on the firm’s financial performance and sentiments seems to dominate, suppressing investors’ expectations of enhanced payouts associated with dividend distribution tax advantages, with considerable reductions in payouts and omissions shown by regular and irregular payers in 2020 and 2021 vis-à-vis the preceding years. The findings signify that the dividend payouts of sample firms are positively associated with the firms’ size, MBV ratio, and past dividends, and negatively allied with free cash flows and the EBITDA margin. Regular payers are observed to be more sensitive to past dividends. The study lends credence to the conservatism and prevalence of signaling and catering theories in the dividend behavior of Indian corporate firms.

scholarly journals Ownership concentration, free cash flow agency problem and future firm performance: New Zealand evidence

2012 ◽  
Vol 9 (3) ◽  
pp. 96-110
Author(s):  
Haiyan Jiang ◽  
Ahsan Habib
Keyword(s):  
New Zealand ◽  
Firm Performance ◽  
Cash Flow ◽  
Ownership Structure ◽  
Financial Institution ◽  
Agency Problem ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Ownership Concentration ◽  
Free Cash Flows

This study seeks to empirically examine the effect of ownership concentration on mitigating free cash flow agency problem in New Zealand. Following Jensen’s (1986) argument that managers have incentives to misuse free cash flows, this study tests whether concentrated ownership structure helps alleviate such a problem or exacerbates it. A natural consequence of this agency problem will be overinvestment and other operational inefficiencies which are likely to have a detrimental impact on firms’ future performance. The second objective of this paper is to examine the association between FCFAP conditional on ownership concentration on future firm performance. We measure free cash flow agency problem as the product of positive free cash flows and growth opportunities proxied by Tobin’s Q and find that financial institution-controlled ownership structure in New Zealand is positively associated with free cash flow agency problem. We also document that free cash flow agency problem conditional on ownership concentration negatively affects future firm performance.

scholarly journals Overinvestment of Free Cash Flow and Manager’s Overconfidence

2018 ◽  
Vol 11 (3) ◽  
pp. 48 ◽  
Author(s):  
EL Gaied Moez ◽  
Zgarni Amina
Keyword(s):  
Empirical Study ◽  
Behavioral Finance ◽  
Positive Relationship ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Investment Expenditure ◽  
Investment Distortions ◽  
Proxy Measure ◽  
Behavioral Attributes ◽  
Free Cash Flows

The problem of over-investment of free cash flows has been heavily debated in the financial literature of companies. However, only a handful of studies have examined this problem in the context of behavioral finance. The objective of this article is to study the effect of the manager’s overconfidence on the over-investment of the free cash flows. We construct a proxy measure of overconfidence and we use Richardson’s model to measure over-investment expenditure. Our empirical study was conducted on a sample of 150 US companies and for a period from 1995 to 2012. Our results show a positive and significant relationship between over-investment and free cash flows. Also, we find the positive relationship is greater when managers are highly confident. The results generated by this study confirm that investment distortions are associated with behavioral attributes or biases.

scholarly journals The Extent of the Impact of the Ownership Structure on the Cash Flows of the Service Shareholding Companies Listed on the Amman Stock Exchange

Webology ◽  
2021 ◽  
Vol 18 (2) ◽  
pp. 1152-1168
Author(s):  
M. Rasha Nuri Latif
Keyword(s):  
Cash Flow ◽  
Public Service ◽  
Ownership Structure ◽  
Stock Exchange ◽  
Cash Flows ◽  
Amman Stock Exchange ◽  
And Performance ◽  
Level Of Significance ◽  
Service Businesses ◽  
The Impact

The study aimed to identify the extent of the impact of the ownership structure on the cash flows in the service businesses registered on the Amman Stock Exchange. While the study sample included (25) service businesses registered on the Amman Stock Conversation for the period between (2010-2019), and the study used the descriptive and analytical approach. The results showed that there is a statistically significant effect at the level of significance (α 0.05) of the ownership structure on the cash flow of Jordanian joint-stock service businesses The attendance of a statistically important result at the equal of significance (α 0.05) for the concentration of ownership on the cash flow of Jordanian public service shareholding companies, as the study recommended on the work of Jordanian companies to focus on the percentage of foreign owners by providing many advantages to investors such as obtaining more profits in If the percentage of their investment in companies increased in order to raise the level of work and performance of companies for the better.

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