Investigating the relationship between cross-sectional free cash flows, dividends and corporate value

Abstract

Free cash flows are considered as one of the most important and influential factors in increasing or decreasing the dividend among shareholders. The more cross-sectional free cash flows experience a growth rate over the short and long term, the more one can expect a dividend increase between shareholders and an increase in stock returns in the short run. Due to the importance of examining free cash flows, dividends and company value to attract investment in companies, in this study, the relationship between cross-sectional free cash flows, dividends on the value of companies was examined. The results of this study based on the information of 87 manufacturing companies active in Tehran Stock Exchange for a period of 6 years from 1393 to 1398 which was done by SPSS software show that cross-sectional free cash flows have a positive relationship with company value and also dividend effect. It has a positive effect on the value of the company.