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.

Free Cash Flow and Earnings Management

2021 ◽  
pp. 85-103
Author(s):  
Sandra Alves
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Fixed Effects ◽  
Positive Impact ◽  
Free Cash Flow ◽  
Mediating Effect ◽  
European Countries ◽  
Free Cash Flow Hypothesis ◽  
Fixed Effects Regression ◽  
The Relationship

This study draws on Jensen's free cash flow hypothesis to evaluate the relationship between free cash flow and earnings management. This study also examines whether the level of leverage moderate the relationship between free cash flow and earnings management. This study uses a fixed effects regression model to examine the effect of free cash flow on earnings management and to test whether leverage levels moderate that relationship for an unbalanced panel of 13,850 firms' year observations from 2011 to 2018 across five European countries. Consistent with the free cash flow hypothesis of Jensen, this study suggests that firms with high free cash flow are more likely to manage earnings. Further, the results also suggest that the positive impact of free cash flow on earnings management is attenuated in firms with high leverage levels. This study contributes to the literature by examining how free cash flow affects the extent of earnings management and by shedding light on the mediating effect of leverage on the relationship between free cash flow and earnings management.

The impact of free cash flows and agency costs on firm performance — An empirical analysis of KSE listed companies of Pakistan

2014 ◽  
Vol 01 (03) ◽  
pp. 1450027 ◽  
Author(s):  
Waqas Bin Khidmat ◽  
Mobeen Ur Rehman
Keyword(s):  
Firm Performance ◽  
Agency Costs ◽  
Negative Impact ◽  
Positive Impact ◽  
Balance Sheet ◽  
Listed Companies ◽  
Cash Flows ◽  
Agency Cost ◽  
Free Cash Flows ◽  
The Impact

The purpose of this research is to find out the impact of free cash flows and agency costs on firm performance in KSE listed companies of Pakistan. A sample of 123 companies listed on KSE representing eight different sectors has been analyzed to determine the association of free cash flows, agency costs and firm performance with each other. For the purpose of analysis, secondary data of selected companies for the period 2003–2009 has been taken from balance sheet analysis of joint stock companies (BSA) issued by State Bank of Pakistan (SBP). Free cash flows have been calculated as by Poulsen (1993) and Lang et al. (1991) while four proxy variables for agency costs are used (Wang, 2010) to assess their relationship with each other and with the firm performance. Results showed that there is a significantly positive relationship between free cash flows and agency cost. Free cash flows have significantly negative impacts on firm performance. The study also shows a significantly negative impact of agency cost on firm performance with exception to total asset turnover (TATO) ratio which has a positive impact. In Pakistani context, the minority shareholders are exploited by the majority shareholders and the management so the government with the help of this study can devise such rules of corporate governance in which the agency cost can be controlled. The investors also are benefitted from this study as they can efficiently manage their portfolio while looking at the impacts of agency costs and firms free cash flows. So this study enables us to better understand the linkage between agency cost, free cash flows and performance measures.

scholarly journals The Impact of Financial Structure Towards Performance of Non-Financial Companies Listed on Amman Stock Exchange

2021 ◽  
Vol 20 (1) ◽  
pp. 61-83
Author(s):  
Laith Fouad Alshouha ◽  
◽  
Wan Nur Syahida Wan Ismail ◽  
Mohd Zulkifli Mokhtar ◽  
Nik Mohd Norfadzilah Nik Mohd Rashid ◽  
...  
Keyword(s):  
Firm Performance ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Financial Structure ◽  
Managerial Ownership ◽  
Data Set ◽  
Amman Stock Exchange ◽  
The Impact ◽  
The Relationship

The purpose of the current study was to investigate the relationship between financial structure towards the financial performance of companies listed on Amman stock exchange (ASE) as one of the emerging economies. This paper adopted a panel data set of 88 non-financial companies listed on the ASE over a period of 10 years from 2009 to 2018. According to empirical results that there is significant evidence to support the fact that debt repaying ability (DRAB), managerial ownership (MANOW), and foreign ownership (FOROW) are positively related to firm performance. Otherwise, the findings revealed no evidence to support the impact of the financial structure ability (FSA) towards firm performance. Moreover, the findings support the fact that firm size (SIZ) has a positive impact on firm performance of companies listed on the ASE. On the other hand, (AGE) has a negative impact on firm performance, while (GROWTH) has no impact on firm performance. The current study encourages managers to maintain a good percentage of debt repaying ability and owners to grant shares as managers’ incentives, and also to attract foreign investors. Future studies, should try applying the current study on the financial sector.

scholarly journals Impacts of Capital Structure and Dividend Policy on the Financial Performance of Listed Companies on Vietnamese Stocks Market

2021 ◽  
Author(s):  
Loan T. Vu ◽  
Anh T. H. Vu ◽  
Thao T. P. Nguyen
Keyword(s):  
Dividend Policy ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Generalized Least Squares ◽  
Listed Companies ◽  
Dividend Yield ◽  
And Performance ◽  
The Impact ◽  
The Relationship

This study is taken to describe the relationship between the levels of debt, dividend policy and the performance of firms listed in Vietnamese stock market. The dividend policy is proxied by the dividend yield while firm’s performance is measured by ROE, ROA, and P/E. The total number of observations is 552, collecting from 92 listed companies on Hochiminh Stock Exchange during 2012 and 2019. The analysis results from generalized least squares (GLS) models report that the choice of firm’s performance proxy affects the relationship between firm’s performance and leverage as well as dividend policy. While leverage has positive impact on ROE and ROA, it has negative impact on P/E. In contrast, dividend yield ratio is negatively correlated with ROA and P/E but positively correlated with ROE. However, the impact of debt levels on firm’s performance is independent with the choice of leverage proxy. The findings of this research are expected to provide better understanding about the connection between debt, dividend and performance of the firm that can support the managers to make relevant decisions.

scholarly journals Kebijakan Dividen dari Perspektive Agency Cost Model (Studi Kasus Perusahaan yang Terdaftar di Bursa Efek Indonesia periode 2011-2013)

2016 ◽  
Vol 5 (1) ◽  
pp. 73
Author(s):  
Akhmad Hitten
Keyword(s):  
Cash Flow ◽  
Ownership Structure ◽  
Cost Model ◽  
Investment Decisions ◽  
Listed Companies ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Dividend Policies ◽  
Main Model ◽  
Observation Period

The paper examines the influence of agency theory on dividend policies with free cash flow,maturity, capital structure, and ownership dividend variables. The sample used in this research isIndonesian listed companies with observation period from 2010 to 2013, and the data collectiontechnique used is data pooling or merging data. The data is analyzed with multiple linearregression analysis in SPSS program. The result of this study indicates that free cash flow,maturity, and ownership structure do not influence devidend policies, however capital structureinfluences dividend policies in Indonesian listed companies. The research also implies thatagency cost theory, as the main model of relevance dividend preposition, cannot explaindividend policies in Indonesian Companies. The investors cannot rely solely on dividend policiesin term of investment decisions in the future. 

Dividend Determinant in Emerging Economy: An Empirical Evidence of Selected Manufacturing Firms of India

2016 ◽  
Vol 8 (01) ◽  
Author(s):  
Akash Agarwal
Keyword(s):  
Special Reference ◽  
Manufacturing Industry ◽  
Dividend Policy ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Research Work ◽  
Free Cash Flow ◽  
The Relationship ◽  
Debt Policy

The current research work is an attempt to explore and identify the determinant of dividend policy with special reference to manufacturing industry of India. For this purpose, five key determinants have been identified based on the review of literature and study have been conducted on eight selected firms of Indian Manufacturing Industry listed in Bombay Stock Exchange. The study was conducted during the period of 2013 to 2015 and multiple regression analysis has been used for identifying and establishing the relationship between key determinant and its effect on dividend policy. The research revealed the significant and positive impact of free cash flow on dividend policy whereas managerial ownership has a significant but negative impact. All other independent variables such as debt policy, firm size and profitability do not have a significant effect on the dividend policy of the firm. Keeping in view the industry specific characteristic the present study is an attempt to fill the dearth of empirical evidences in field of corporate finance with special reference to emerging economies like India.

scholarly journals Testing the Relationship between Free Cash Flow and Company Performance in Borsa Istanbul

2017 ◽  
Vol 10 (5) ◽  
pp. 148
Author(s):  
Eyup Kadioglu ◽  
Saim Kilic ◽  
Ender Aykut Yilmaz
Keyword(s):  
Cash Flow ◽  
Negative Relationship ◽  
Free Cash Flow ◽  
Company Performance ◽  
Data Set ◽  
Dividend Payments ◽  
Significant Negative Relationship ◽  
Free Cash Flow Hypothesis ◽  
The Relationship ◽  
Positive Effect

This study tests whether free cash flow affects the performance of firms in the context of the free cash flow hypothesis. The study applies a panel regression method to a data set consisting of 2,175 observations belonging to 370 companies listed in Borsa Istanbul during the period 2009-2015. A significant, negative relationship is found between free cash flow and firm performance measured by Tobin’s Q ratio. Greater free cash flow in the hands of managers leads to the lower performance and, conversely, less free cash flow in the hands of managers leads to higher performance. The results also confirm that leverage and dividend payments have a positive effect on performance. Thus, the results support the free cash flow hypothesis for Turkey.

Female directors and firm performance in Italian and Spanish listed firms

2019 ◽  
Vol 32 (3) ◽  
pp. 411-436
Author(s):  
Juan Francisco Martín-Ugedo ◽  
Antonio Mínguez-Vera ◽  
Fabrizio Rossi
Keyword(s):  
Firm Performance ◽  
Cultural Values ◽  
Negative Impact ◽  
Positive Impact ◽  
Thinking Styles ◽  
Method Of Moment ◽  
Content Type ◽  
Female Directors ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to examine the relationship between women on the board of directors and firm performance in a comparative analysis between Italy and Spain. Design/methodology/approach The generalized method of moment is employed to examine this relationship in a sample of 1,393 firm-year observations. Findings The results show that the presence of women on the board has a positive impact on the performance of Italian and Spanish firms. However, when the whole sample is divided into Italy and Spain, some results are remarkable. For Spain, the presence of women on the board has a positive influence on firm performance, whereas for Italy the authors find a negative and significant effect on firm performance. This study also finds that the “masculinity” dimension has a negative impact on firm performance. Practical implications The results of this study have several practical implications. First, masculinity differences within the countries can have a large impact on firm performance and can explain some differences between similar countries. Second, the legal system of countries might not explain adequately some differences in the decision-making process. Third, cultural values and thinking styles, in terms of masculinity, might better explain why the results on the relationship between female directors and firm performance are mixed. Fourth, the findings suggest that it is very important to promote gender equality, not only by passing laws but also taking action about the educational system. Originality/value To the best of the authors’ knowledge, this is the first study that investigates the relationship between female directors and firm performance between Italy and Spain considering the cultural differences in term of “masculinity.”

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