Unexpected investment, tunnelling and financial constraints

PurposeBased on a sample of 1,435 Vietnamese listed firms over the period from 2005 to 2017, this study examines the sensitivity of unexpected investment to free cash flow and its mechanism.Design/methodology/approachWe tested three hypotheses using two-step system-GMM to investigate investment–cash flow sensitivity for various firm scenarios while accounting for confounding variables.FindingsFirms with negative free cash flow are more likely to engage in underinvestment; conversely, overinvestment is found primarily in firms with positive free cash flow. In terms of the mechanism, while underinvesting decisions are caused mainly by financial constraints, overinvesting behaviour primarily resulted from agency problems, typically in the form of principal-principal conflicts. Interestingly, under the impact of negative cash flow observations, financial constraints tend to decrease investment–cash flow sensitivity. Conversely, the agency costs hypothesis reveals that agency problems are more likely to increase investment–cash flow sensitivity.Originality/valueThese findings not only contribute to the current corporate literature but also provide some important practical implications for stock market investors, corporate managers, and policy-setting bodies, specifically in the Vietnamese market.

Research on Optimization method of power flow of cylindrical shell stiffener based on BESO

In order to establish a method for topological optimization of the power flow response of a cylindrical shell stiffener structure based on BESO, this paper will combine the BESO topology optimization theoretical and the power flow response theory , and take the overall minimization of the power flow of the cylindrical shell stiffener structure as the optimization goal. Then an iterative optimization algorithm for the layout of the stiffener structure on the cylindrical shell surface can be established. The plate-beam coupling structure is used to simulate the cylindrical shell stiffener structure, a finite element model of the cylindrical shell stiffened is established and solved to obtain the power flow sensitivity of the finite element. This is used as an iterative criterion for the layout of the stiffener on the surface of the cylindrical shell structure optimize. Through the analysis of numerical examples, it is obtained that the optimization of the rib layout can better reduce the overall power flow response of the structure, which also verifies the feasibility of the optimization method.

Financial Constraints across Pakistani Listed Firms

Using Q investment model to scrutinize investment-cash flow sensitivity, a measure of financial constraint, has been a subject of controversy in literature. By using an alternative model called Error Correction model, this study aims to check the sensitivity between firm’s internal finance and investment level for the case of lower middle income country. Literature has shown that firms’ specific characteristics affect the relation between investment and cash flow of the firms. By considering the unique characteristics of Pakistani corporate sector, this study further target to check whether the investment-cash flow sensitivity differs across size of the firms, group affiliation of the firms and dividend policy of the firms. Our findings indicate that Pakistani listed firms are financially constrained. We find a strong relationship between investment and cash flow for small and non-dividend-paying firms; whereas group-affiliation does not affect investment- cash flow sensitivity of firms.

The Indirect Impact of Busy Directors on the Relationship of Family Structure and Cash Flow Sensitivity of Cash (Empirical Research in Indonesia’s Manufacturing Sector 2013-2017)

Research aims: This research aimed to determine the impact of family structure on the cash flow sensitivity of cash (CFSC) in the manufacturing sector. It also investigates the indirect impact of busy directors as a moderating effect.Design/Methodology/Approach: Based on a sample of Indonesia’s manufacturing companies from 2013 to 2017, the researcher uses GLS regression models on this panel data calculated with robustness fit test at the firm’s level.Research findings: It indicated that family structure has a impact positively on cash flow sensitivity of cash and statistically significant. Meanwhile, the indirect impact of busy directors found to have a impact negatively and weakened on the relationship of family structure and CFSC, it also indiciated that quality of busy directors is an tool of corporate governance that is effectively to monitor of every family firm’s decisions.Theoretical contribution: This article enriches previous literature by justifying the impact of busy directors on the relation between every each of family’s firm decision and CFSC. Furthermore, it showed us a metric for agency problems that is the sensitivity of cash to corporate cash flows.Implication policy: Based on POJK regulations, the context of busy directors in this research refers to the roles and duties of the Board of Commissioners (BOC) which concurrently hold positions for other public companies.Research Limitation/Implication: The implications suggest that almost most of Indonesian family corporation are tend to expropriate minority by extracting rents through coporate cash flow sensitivity of cash behavior.