Free Cash Flow Research Articles

The Influence of Company Growth, Profitability, and Free Cash Flow on Company Value with Dividend Policy as Moderating Variable (An Empirical Study on Manufacturing Companies Listed on the Indonesia Stock Exchange from 2018-2020)

This research aims to analyze the influence of a company’s growth, profitability, and free cash flow on the company’s value and the role of dividend policy in moderating this relationship. The research population is 159 manufacturing companies listed on the Indonesia Stock Exchange from 2018-2020. The sample is selected using a purposive sampling technique. There are 44 companies as the sample with 132 units of analysis. The data analysis uses Moderated Regression Analysis (MRA) supported by Eviews 9 tool. The results show that growth and profitability influence the company’s value, while free cash flow does not affect the value. A dividend policy can weakly moderate the relationship between a company’s growth and value, but it cannot moderate profitability and free cash flow to the company’s value.
 Keywords: free cash flow, dividend policy, company value; company growth; profitability

Cash Holdings Determinants: The Case of Malaysian Local Authorities

This paper investigates the determinants of cash holdings by Malaysian local authorities. The researchers seek understanding on the motivation/intention behind the pattern of cash holdings and the theory that may be able to explain why the local authorities hold such amount of cash. Extensive research affirms that organizations in the private sector possess reasons to maintain cash, encompassing transactional, precautionary, and speculative objectives. The pecking order theory, trade-off theory, and free cash flow theory are also significant frameworks that explain why individuals, businesses, and institutions hold cash. However, there has been limited investigation into the factors influencing cash holdings in the public sector, particularly among local authorities in Malaysia. Therefore, relationship between the local authorities’ size, growth opportunities, financing deficits, liquidity, leverage, capital expenditure and access to credit market and cash holdings in Malaysian local authorities is examined. The sample in this study is 37 districts in Malaysia and data is collected from financial statements of the studied districts between 2015 and 2019. Thus, the total observations in this study are 185 districts-years.

PENGARUH LEVERAGE, PERTUMBUHAN PENJUALAN, PROFITABILITAS, DAN FREE CASH FLOW TERHADAP MANAJEMEN LABA RIIL

The purpose of this study is to empirically examine the influence of leverage, sales growth, free cash flow, and profitability, towards real earnings management. The population in this research is all the companies in the manufacturing companies listed in Indonesia Stock Exchange from period 2018 to 2020. This research use the sampling data of 64 firms. The sampling is using purposive sampling method. This research used econometric views (EViews) version 12 software to process the data. The result of research shows that leverage have positive significant influence towards real earnings management. Sales growth, free cash flow, and profitability have no significant influence towards real earnings management.

PENGARUH FREE CASH FLOW DAN FAKTOR-FAKTOR LAINNYA TERHADAP EARNINGS MANAGEMENT

The purpose of this study is to obtain empirical evidence regarding the effect of free cash flow, profitability, institutional ownership, leverage, board of commissioners, sales growth, and firm size on earnings management. This study used 74 manufacturing companies listed on the Indonesia Stock Exchange during period 2019 - 2021 as samples with a total sample data is 222 data. The sample selection process uses the purposive sampling method and uses the multiple regression method in testing hypotheses. The empirical evidence obtained regarding the results of this study shows that free cash flow, profitability, and leverage have an influence on earnings management. If the free cash flow, profitability, and leverage owned in a company are high, the level of earnings management is also high. In this study, the institutional ownership, board of commissioners, leverage and firm size had no influence on earnings management.

PENGARUH PROFITABILITY, WORKING CAPIRAL, DAN FREE CASH FLOW TERHADAP FINANCIAL DISTRESS PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2018-2020

The main purpose doing this study is to analyze the effect of Profitability, Working Capital, and Free Cash Flow of Financial Distress on manufacturing companies listed in the Indonesian Stock Exchange in period 2018-2020. In this research used E-views 12 and Microsoft Excel 2019 for processing data. This research used the Purposive Sampling for the sample selection, based in the kriteria in this research there is 71 manufacturing companies in used in this research and the total is 213 sample for 3 years. In this research the result is Profitability have a positive and significant effect on Financial Distress, Working Capital have a positive and significant on Financial Distress, and Free Cash Flow have negative and not significant on Financial Distress.

The Impact of Surplus, Promoter Holding, Leverage and Retained Earnings on Dividend Payment Decisions: Evidence from Small- and Mid-sized Firms in India

Free cash flow is a crucial component in deciding the dividend payout ratio; but literature has not sufficiently explored the effects of the same, specifically on dividend payment decisions. We therefore examine whether a firm’s deficit or cash surplus affects ‘cash dividend payout’ for Indian small- and mid-sized firms. Also, we have explored the idea of studying the effect of promoter holding on the dividend policy of mid-cap and small-cap firms listed in the stock exchange of India. Our study also determines the relationship between retained earnings and the dividend policy. The sample of the study includes 174 non-financial companies from the NIFTY MidSmallcap 400 Index from April 2011 till March 2019. Applying the Logit and Tobit models, we have arrived at the findings. Our findings demonstrate that surplus cash positively influences the decision of paying dividends in both mid-cap and small-cap firms. The findings also indicate that mid-cap firms use retained earnings for scaling up rather than distributing dividends and small-cap firms distribute dividends. We prove that Indian business houses with high promoter holdings are less in favour of distributing dividends. The results have the limitation of geography and period and may not be valid for other countries.

Free Cash Flow and Short-term Debt of Firms Listed at the Nairobi Securities Exchange Kenya

The short-term debt account's value is crucial in assessing the performance of the business. Free cash flow is the amount of money a business has left over after covering its cash outflows for operating costs and capital asset maintenance. If a company takes on more debt, it will have less free cash flow available for equity in the current year. Since the debt has been paid off and does not need to be repaid, this decrease is offset in the upcoming years by a rise in free cash flow to equity. The exact opposite occurs if the company takes on additional debt. The study was anchored on free cash flow theory and trade off theory. The study applied secondary data obtained from the firms from 2007-2011. Panel data was used to increase data observations. The data was initially analysed using pooled ordinary least squares (OLS) regression model. The result showed a positive and significant relationship between free cash flow and short term debt of firms. With this result, it is recommended that managers of listed firms on NSE should assess the company’s overall financial flexibility and short term debt needs to determine the optimal balance between free cash flow and short term debt as excessive reliance on free cash flow for short term debt repayment may increase vulnerability.

Dual-class share structure and dividend smoothing

This paper delves into the implications of the dual-class share structure, an increasingly prevalent ownership model, for dividend smoothing behaviors. Using a large sample of the U.S., our analysis reveals that firms with dual-class share structures exhibit lesser dividend smoothing behaviors compared to their single-class counterparts. The influence of the dual-class share structure on dividend smoothing is more significant among firms characterized by high free cash flows, limited growth prospects, and those in their mature stages. Furthermore, we observe a higher propensity for dividend reductions or omissions in dual-class firms.

A Valuation Model for the Development of Sinovac Biological Company under COVID-19 Shock

This paper provides an in-depth study of the impact of the COVID-19 pandemic on the global economy and the pharmaceutical and medicine industry, focusing on the Chinese company Biologicals. The financial situation of Sinovac Biologicals before and after the pandemic is analyzed in depth by building a valuation model with data from two different time periods. Before the COVID-19, the company faced cash flow problems and a relatively low market capitalization. This is mainly because at that time, the company may not have been involved in areas related to vaccine production, and the market capitalization was constrained by market demand and industry competition. However, with the outbreak, the company became actively involved in the development and production of the COVID-19 vaccine, leading to a significant improvement in its free cash flow and a rise in its market capitalization. Although the model results emphasize this positive trend, this papermust keep in mind the model's uncertainty and risk factors. Future economic and market conditions are fraught with uncertainty, and Cochrane Biologics may also be exposed to other risks, such as volatility in the vaccine market, policy changes and increased competition. Therefore, a combination of these factors is critical to accurately assessing the company's valuation and prospects.

The Effect of Free Cash Flow, Leverage, and Profitability on Dividend Policy in IDX-Listed Transportation and Logistics Companies

In the business world, companies continuously strive to enhance their value through various strategies and policies. One of the critical policies influencing a company's value is the dividend policy. Dividend policy is a crucial decision for company management as it reflects the financial condition and prospects of the company and can influence shareholders' investment decisions. This study examines the influence of free cash flow, leverage, and profitability on dividend policy in transportation and logistics companies listed on the Indonesia Stock Exchange from 2018-2022. The data used in this study are secondary data obtained from the companies' annual financial reports. This research employs purposive sampling to select 20 companies from a population of 37 IDX-listed transportation and logistics companies. This study measures free cash flow using the free cash flow ratio, leverage using the debt-to-equity ratio, and profitability using return on equity. This study analyzed the data using descriptive statistics and Partial Least Squares (PLS) technique. The study's results indicate that free cash flow and profitability significantly influence dividend policy. Since profitability significantly affects dividend policy, companies with high profitability have to increase dividend payments to attract and retain investors. This will increase positive perceptions in the market and increase the company's stock value. Besides, high free cash flow indicates that the company has sufficient liquidity to pay dividends without sacrificing important investments in operations or growth. Therefore, companies must adopt effective cash management strategies to ensure healthy cash flow, such as optimizing operational costs, working capital efficiency, and appropriate financing strategies to maintain liquidity. Leverage does not affect dividend policy but can provide mixed signals to the market regarding the company's financial condition.

Presenting an Optimal Model for Explaining Capital Structure Management with a Market Value Creation Approach

Objective: The aim of this study is to present an optimal model for capital structure management with a market value creation approach. Methodology: This study utilized data from companies listed on the Tehran Stock Exchange over a six-year period (2017-2022). A regression model was first used to analyze the impact of various variables on capital structure. Subsequently, a decision tree algorithm and the Root Mean Square Error (RMSE) criterion were employed to provide an optimal model for capital structure management. The primary variables studied include economic value added (EVA), growth rate of shareholders' equity, earnings per share (EPS) growth, company size, financial leverage, and free cash flow. Findings: The results indicated that economic value added, growth rate of shareholders' equity, and earnings per share growth had the most substantial impact on market value added. In contrast, variables such as company size, book-to-market ratio, financial leverage, and free cash flow did not establish a significant relationship with market value added. Additionally, it was found that capital structure alone is not the primary driver of market value creation. Conclusion: This study demonstrates that in capital structure management, companies should focus on variables such as economic value added and earnings growth rather than solely on optimizing the debt-equity mix. These variables can significantly contribute to increasing market value and improving financial performance.

Emphasis on Free Cash Flow and its Implications for Corporate Investment

Emphasis on Free Cash Flow and its Implications for Corporate Investment

The nexus between free cash flow, audit committee characteristics, and earnings management practices

The nexus between free cash flow, audit committee characteristics, and earnings management practices

The nexus between free cash flow, audit committee characteristics, and earnings management practices

The nexus between free cash flow, audit committee characteristics, and earnings management practices

Firms Characteristics and Board Composition Impact on Dividend Policy: A Study on Role of Crisis (Pandemic) Period in Indian Context

The global pandemic has weakened the company’s financial stability and slowed the economy. Using 241 Indian-listed companies of the BSE (A Group) for 5 years (i.e., 2017–2021), the study aims to examine the moderating role of the pandemic crisis on the dividend policy and its determinants associations. Applying the regression technique, the study reveals that profitability, liquidity, leverage, firm size and board independence have significant impact on dividend policy for the Indian listed businesses. However, the overall findings of the study suggest that the instability in the economic condition that occurred for the years 2020 and 2021 has weakened the association of free cash flows, the board size, CEO duality, and board independence with the dividend policy in India. The study also reports the positive impact of the crisis on dividend policy; accordingly, it implies that Indian firms may prefer to pay dividends during the crisis period to calm investors and restore their confidence. Relatively a low relationship between free cash flows and the state of the economy with the dividend policy is an indicator of serious agency problems.

The governance involvement in the relationship between earnings management and surplus free cash flow

The purpose of this study is to examine empirically the association between surplus free cash flow (SFCF) and earnings management (EM), and the moderating effect of governance on this relationship. The study used a sample of non-financial companies listed on the Amman Stock Exchange (ASE) over the ten-year period (2011–2020) with all the information necessary to estimate the study variables. The modified Jones (1991) model is used to estimate discretionary accruals, a widely used proxy for earnings management. Based on the regression analysis of the related panel data collected, the study’s findings indicate that SFCF is positively associated with EM activities. This result is consistent with most prior related study’s findings (Nouri & Gilaninia, 2017; Rahmawati, 2020) and suggests that when growth opportunities are limited, the free cash flow induces management to involve in upward management practices. Additionally, results indicate a significant negative impact of the interaction variable SFCF*AQ (audit quality) on EM, suggesting that, in an SFCF situation, AQ reduces manager’s tendency to involve in upward EM practices. The study’s results are likely to be useful for accounting researchers, local governmental bodies, and policymakers who are concern with the impact of EM practices on the quality of earnings.

МЕТОДИКА ОЦЕНКИ АКТИВНЫХ ОПЕРАЦИЙ КОММЕРЧЕСКОГО БАНКА

The generation of the main financial result of commercial banks directly depends on the effectiveness of active operations. The evolution of financial relations, the achievement of the main goal of the credit institution’s activ- ities to obtain a positive financial result and the desire of commercial banks to use and diversify free cash flows in the economic environment – all this has determined the relevance of this scientific research. In their activities, all credit institutions constantly apply an effective banking management policy through methods of evaluating active transactions, as well as obtaining complete and timely information about the functioning of a credit institution is ensured by constant monitoring, timely prompt response to rapid changes in the banking services market in modern conditions, which contributes to their more efficient functioning. Generating a high financial result, maintaining an acceptable level of solvency and liquidity of banking activities is ensured by effective management of active operations of a credit institution, competent placement of available funds.

Research on the Influence of Free Cash Flow and Board Governance on the Stickiness of Expenses in State Owned Enterprises under Mixed Reform

Research on the Influence of Free Cash Flow and Board Governance on the Stickiness of Expenses in State Owned Enterprises under Mixed Reform

Coal mine methane in Kazakhstan: economic and environmental case study

The study aimed to evaluate the economic and financial viability of a coal mine methane (CMM) utilization project in Central Kazakhstan, demonstrating a methodology for similar initiatives. The analysis was based on the 2013 project proposed by the US Environmen-tal Protection Agency (EPA) that intended to capture methane emissions from six coal mines for electricity generation, yet was never implemented. The study’s relevance stems from Kazakhstan’s 2030 methane pledge, recent progress in the country’s climate change-related policy, mineworker mortality in 2023, and the shift of mines ownership. Building upon the technical specifications of the 2013 US EPA project, this research em-ployed standard financial and economic cost-benefit analysis (CBA). The financial model utilized a traditional discounted free cash flow approach, while the economic model in-corporated additional factors like the value of statistical life (VSL), shadow pricing, as well as benefits associated with mitigating ozone health impacts, crop damage, mine ex-plosion risks, and CO2 emissions. The economic model has indicated a positive net pre-sent value of $243 mln and 42% internal rate of return. The financial analysis also sug-gests potential profitability under fair electricity and carbon pricing market conditions. To assess project robustness under varying economic and financial assumptions, the study included a sensitivity analysis. The research has likewise leveraged prior CMM-related studies in Kazakhstan and provides valuable guidance for analyzing similar projects. In addition, it also highlights the need for certain adjustments in the current legislation to incentivize such projects, as well as to promote environmental sustainability and social development by mitigating methane emissions, which aligns with Kazakhstan’s climate goals.

PENGARUH FREE CASH FLOW, PROFITABILITAS, STRUKTUR MODAL DAN KEBIJAKAN DIVIDEN TERHADAP NILAI PERUSAHAAN

The value of a company plays an important role in reflecting its condition based on stock prices. An increase in stock prices has a positive impact on shareholders' wealth, thereby maximizing their profits. This research is a quantitative study that utilizes the comparative causal research method. The variables examined include Free Cash Flow, Profitability, Capital Structure, and Dividend Policy as dependent variables, while Company Value serves as the independent variable. Secondary data from financial statements of companies listed on the Indonesia Stock Exchange for the period 2017-2021 were used in this study. The results of this research indicate that Free Cash Flow, Profitability, Capital Structure, and and significant effect on Corporate Value.