The Relationship between Agency Cost and Capital Structure: A Study with the Restriction of Free Cash Flow

2010 ◽  
Author(s):  
Junhong Chu
Keyword(s):  
Capital Structure ◽  
Cash Flow ◽  
Agency Cost ◽  
Free Cash Flow ◽  
The Relationship

scholarly journals FAKTOR-FAKTOR PENENTU STRUKTUR MODAL PADA PERUSAHAAN PROPERTY, REAL ESTATE, AND BUILDING CONSTRUCTION YANG TERDAFTAR DI BURSA EFEK INDONESIA

2020 ◽  
Vol 8 (2) ◽  
Author(s):  
Pascasarjana FEB UNTAN Magister Manajemen
Keyword(s):  
Real Estate ◽  
Capital Structure ◽  
Cash Flow ◽  
Free Cash Flow ◽  
Building Construction ◽  
Company Size ◽  
Growth Opportunities ◽  
Tax Shields ◽  
Relationship Of ◽  
The Relationship

This research aims to analyze how much influence the profitability, tangibility, growth opportunities, non-debt tax shields, free cash flow on capital structure with company size as a moderating variable. Data analysis model used in this research is descriptive statistical analysis and inference. The population in this research are property, real estate and building construction companies listed on the Indonesia Stock Exchange during the period of 2013-2017. The samples were selected by using purposive sampling of 45 companies which sample companies collected with the criteria of having financial reports in a row during the research period. The research results show that the variable of profitability, tangibility, free cash flow had a negative and significant effect on capital structure. While the growth opportunity variable has a positive and significant effect on capital structure. Non-debt tax shields have no effect on capital structure. In addition, company size as a moderating variable has a significant effect as moderation between the relationship of tangibility to capital structure and growth opportunities to capital structure, but does not moderate the relationship of profitability to capital structure, non-debt tax shields to capital structure and free cash flow to capital structure.

scholarly journals Free cash flow, ownership structure, and capital structure: Impact on agency cost

2020 ◽  
Vol 2 (2) ◽  
pp. 63-71
Author(s):  
Yoga Khomaini Aditya ◽  
Husnah Nur Laela Ermaya ◽  
Ratna Hindria Dyah Pita Sari
Keyword(s):  
Capital Structure ◽  
Cash Flow ◽  
Ownership Structure ◽  
Agency Cost ◽  
Free Cash Flow

scholarly journals Analysing the Impacts of Free Cash Flow, Agency Cost and Firm Performance in Public Listed Companies in Malaysia

2021 ◽  
Vol 5 (1) ◽  
pp. 211-218
Author(s):  
Noraina Mazuin Sapuan ◽  
Norwazli Abdul Wahab ◽  
Muhammad Ashraf Fauzi ◽  
Aktom Omonov
Keyword(s):  
Firm Performance ◽  
Cash Flow ◽  
Negative Impact ◽  
Positive Impact ◽  
Listed Companies ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Asset Turnover ◽  
Free Cash Flow Hypothesis ◽  
The Relationship

This study intended to examine the relationship between free cash flow and agency costs towards firm performance based on the data from 350 public listed companies in Malaysia. The data was collected from year 2005 to 2015. There is a need to re-examine the free cash flow hypothesis and the agency theory based on Malaysian data as the results from previous studies shown a mix results.The findings shown free cash flow is significantly giving positive impact on firm performance. This result is contradict to free cash flow hypothesis, but it can occur due to, when the availability of investments opportunities that can be generated when firm more free cash flow that later able to increase firm performance. Meanwhile, total asset turnover has a positive impact on return on asset. However, the operating expenses ratio demonstrates that the operating expenses ratio has a negative impact on return on asset. The mix findings of agency cost are supported by previous studies.

scholarly journals The Effect of Profitability and Free Cash Flow on Capital Structure Moderated by Firm Size (Studyon Food and Beverage Sub-Sector Companies on the IDXin 2011-2018)

2021 ◽  
pp. 64-73
Author(s):  
Vivi Septyaningsih ◽  
Asep Risman
Keyword(s):  
Capital Structure ◽  
Cash Flow ◽  
Firm Size ◽  
Sampling Method ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Free Cash Flow ◽  
Analysis Technique ◽  
Food And Beverage ◽  
The Relationship

This study aims to analyze the effect of profitability and free cash flow on capital structure with firm size as a moderating variable. The population in this study is the food and beverage sub-sector company on the IDX in 2011-2018. The sample used was 9 companies, which were selected based on the purposive sampling method. The data analysis technique used is multiple linear regression analysis and residual test.The results showed that the profitability variable had no effect on capital structure. While the free cash flow variable has a positive and significant effect on capital structure. In the moderation test with the residual test approach, firm size does not moderate the relationship between profitability and free cash flow on the capital structure

scholarly journals The Mediating Role of Firm’s Performance on The Relationship between Free Cash Flow and Capital Structure

2021 ◽  
Vol 58 (1) ◽  
pp. 1209-1216
Author(s):  
Asep Risman, Parwoto, Agus Sunarya Sulaeman
Keyword(s):  
Capital Structure ◽  
Cash Flow ◽  
Stock Exchange ◽  
Free Cash Flow ◽  
Analysis Model ◽  
Mediating Role ◽  
The Relationship ◽  
Path Analysis Model ◽  
The Capital Structure

 This study aims to examine the effect of Firm’s performance as an intervening in the influence of the free cash flow on the  capital structure. As well as the direct effect of Firm’s performance and free cash flow on the  capital structure. This study uses a path analysis model and polling data from on 22 companies of various industrial subsectors on the Indonesia Stock Exchange (IDX), over a period of 10 years (2009 to 2018). The results show that although free cash flow does not directly affect the capital structure, it is proven that profitability affects the capital structure and can mediate the effect of free cash flow on capital structure. These findings support agency theory, that management prefers to use free cash flow to make investments, so that fluctuations in the free cash flow will affect the  financial performance, this condition will ultimately affect the capital structure.

scholarly journals Free cash flow, investment inefficiency, and earnings management: evidence from manufacturing firms listed on the Indonesia Stock Exchange

2018 ◽  
Vol 15 (1) ◽  
pp. 299-310 ◽  
Author(s):  
Zaki Fakhroni ◽  
Imam Ghozali ◽  
Puji Harto ◽  
Etna Nur Afri Yuyetta
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Structural Equation ◽  
Stock Exchange ◽  
Manufacturing Firms ◽  
Free Cash Flow ◽  
Path Model ◽  
Equation Modeling ◽  
Fixed Assets ◽  
The Relationship

The study aims to test investment inefficiency of fixed assets in mediating the relationship between free cash flow and earnings management and to test the controlling shareholders in moderating the relationship between free cash flow and fixed assets investment inefficiency. The research problem proposed in this study is whether the use of free cash flow for the investment inefficiency of fixed assets is able to ultimately improve the managerial performance. This research investigates new empirical evidence related to management earnings practices caused by free cash flow fixed assets investment inefficiency. The study was conducted on all the manufacturing firms listed on the Indonesia stock exchange from 2010 to 2015. The data used are secondary data in the form of the firms’ financial statements. Using purposive sampling, 314 units were analyzed from 69 manufacturing firms. The estimation of the path model was completed using Structural Equation Modeling (SEM) by WarpPLS program version 5.0. The results showed that free cash flow is positively related to earnings management. Fixed assets investment inefficiency is able to mediate the relationship between free cash flow and earnings management.

scholarly journals PENGARUH FREE CASH FLOW TERHADAP UTANG

2017 ◽  
Vol 4 (2) ◽  
pp. 107
Author(s):  
Heru Nurwahyudi ◽  
Aida Ainul Mardiyah
Keyword(s):  
Cash Flow ◽  
Hypothesis Test ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Third Party ◽  
Manufacturing Companies ◽  
Font Size ◽  
Public Companies ◽  
Agency Relationship ◽  
Debt Policy

<p style="text-indent: 0.4in; margin-top: 0.18in; margin-bottom: 0in;" align="JUSTIFY"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Verdana,sans-serif;"><span style="font-size: small;"><span style="font-style: normal;">The </span></span></span></span></span><em><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">objective of this research is to analysis and giving the empirical evidence </span></span></span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">about the free cas flow and the effect of it for debt policy of public companies in </span></span></span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">Indonesia. This research was using 66 samples of manufacturing companies in the </span></span></span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">year 2000 and 90 sample of manufacturing in the year 2001. This sample was </span></span></span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">elected based on purposive sampling, the hypothesis test is the simple tinier regres-</span></span></span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">sion.</span></span></span></span></em></span></span></p><p style="text-indent: 0.4in; margin-top: 0.03in; margin-bottom: 0in;" align="JUSTIFY"><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><em><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">The result of this research showed that hypothesis were suppo</span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;"><span style="font-size: small;">4</span></span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">ted, there </span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">are influence of free cash flow to the debt policy. In the agency relationship there is </span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">differences interest between the principal and the manager also created agency </span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">problems that finally also create agency cost. In the shareholders (agents) point of </span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">view, this can be minimize by the third party (debtho!der) whose come by the debt </span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">policy. Increasing financing with debt will reduce the conflict between the sharehold-</span></span><span style="font-family: Arial,sans-serif;"><span style="font-size: small;">ers and the management.</span></span></em></span></span></p><p style="margin-top: 0.2in; margin-bottom: 0in;"><span style="font-size: small;"><span style="font-size: small;"><span style="font-family: Arial Narrow,sans-serif;"><em><strong>Keywords: </strong></em></span></span><span style="font-size: small;"><span style="font-family: Arial,sans-serif;"><em><span style="font-weight: normal;">Free cash flow, debt</span></em></span></span></span></p>

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