Effect of Principal-principal Conflict on Relationship between Financial Flexibility with investment propensity and dividend payouts

Flexibility can be seen as a link between domestic and foreign borrowing capacity, and through accumulated internal funds enabling the company to make growth choices at the right time and in a competitive manner, and do projects with positive net present values. But the existence of Principal-principal Conflict due to separation of ownership from management can affect this effectiveness. The purpose of this study is to investigate the effect of financial flexibility on the intensity of investment and dividend with emphasis on role of principal-principal Conflict in the companies admitted to Tehran Stock Exchange. In general, the use of a sample (102 companies) from Stock Exchange companies for the years 2011-2017, based on linear regression, suggests that the flexibility financial composite index has a significant positive effect on investment propensity and dividend policy. And the interactive effect of flexibility financial composite index and Principal-principal Conflict composite index have a moderating effect on investment propensity and dividend policy and has a significant negative effect on the investment propensity and dividend policy.