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Investigation of the Impact of Free Cash Flows on Financial Flexibility and Dividend Policy in Firms Listed in Tehran Stock Exchange (TSE)


Affiliations
1 Department of Accounting, Urmia Branch, Islamic Azad University, Urmia, Iran, Islamic Republic of
2 Department of Accounting, Urmia Branch, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of
     

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The aim of this study is to investigate the impact of free cash flows on financial flexibility and dividend policy in firms listed in Tehran Stock Exchange (TSE). To measure free cash flow, Ang et al. (2000) is used and financial flexibility is captured by Marchica & Mura (2007) model. The population of the study is firms listed in TSE; however, the study sample consists of 100 firms listed in TSE which is studied during the period of 2007 to 2011. Logistic and pooled regressions are used to test hypotheses. The results show that free cash flows have a positive significant impact on financial flexibility and dividend policy in firms listed in TSE. The results also show that free cash flows are higher when there is a financial flexibility.

Keywords

Free Cash Flows, Financial Flexibility, Dividend Policy.
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  • Investigation of the Impact of Free Cash Flows on Financial Flexibility and Dividend Policy in Firms Listed in Tehran Stock Exchange (TSE)

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Authors

Saeid Jabbarzadeh Kangarlouei
Department of Accounting, Urmia Branch, Islamic Azad University, Urmia, Iran, Islamic Republic of
Banafsheh Ramizipour
Department of Accounting, Urmia Branch, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of
Morteza Motavassel
Department of Accounting, Urmia Branch, Islamic Azad University, Urmia, Iran, Islamic Republic of

Abstract


The aim of this study is to investigate the impact of free cash flows on financial flexibility and dividend policy in firms listed in Tehran Stock Exchange (TSE). To measure free cash flow, Ang et al. (2000) is used and financial flexibility is captured by Marchica & Mura (2007) model. The population of the study is firms listed in TSE; however, the study sample consists of 100 firms listed in TSE which is studied during the period of 2007 to 2011. Logistic and pooled regressions are used to test hypotheses. The results show that free cash flows have a positive significant impact on financial flexibility and dividend policy in firms listed in TSE. The results also show that free cash flows are higher when there is a financial flexibility.

Keywords


Free Cash Flows, Financial Flexibility, Dividend Policy.

References