Effects of Cash Flow Volatility on Investment with Restricted Financing Sources
Author(s):
Abstract:
Change in operating cash flows along with uncertainty about rate of the change in future cause variation in firms investment. This study aims to examine the effects of cash flow volatility on firms investment, regarding restriction in financing sources. To test the hypotheses, data from a sample of 129 firms listed in the Tehran Stock Exchange in the years 2006 to 2013 were collected, using GLS method of regression estimation.
Findings showed that in the firms with restricted sources of financing and the growth rate of operating cash flow, changing from positive to negative rates, or vice versa, the operating cash flow volatility decreases firms investment. Also, it was found that the negative growth rates have greater effects on firm's investment, than the positive growth rates. However, in the firms with no restriction in financing, there is no relationship between operating cash flow volatility and firms investment.
Findings showed that in the firms with restricted sources of financing and the growth rate of operating cash flow, changing from positive to negative rates, or vice versa, the operating cash flow volatility decreases firms investment. Also, it was found that the negative growth rates have greater effects on firm's investment, than the positive growth rates. However, in the firms with no restriction in financing, there is no relationship between operating cash flow volatility and firms investment.
Language:
Persian
Published:
Journal of Accounting Knowledge, Volume:8 Issue: 28, 2017
Pages:
29 to 49
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