Investigating the Relationship between Adjustment of Free Cash Flow with Growth Opportunities and Abnormal Return

The main purpose of study is to investigate the relationship between adjustment in the measurement of free cash flow with growth opportunities and abnormal returns of companies listed in Tehran Stock Exchange. The research hypotheses were tested on the basis of a statistical sample of 95 companies over a 10-year period from 2009 to 2018 using multivariate regression models. The results of the research show that, there is a significantly negative relationship between free cash flow based on full offset and partial offset with growth opportunities. Also, there was significantly positive relationship between no-offset free cash flow and growth opportunities. Finally, there is a significantly negative relationship between the free cash flow of full offset, partial offset, and no offset with abnormal returns. Overall, the results showed that unadjusted free cash flow is a measure that will provide better information for investors, managers, creditors and other shareholders with unbiased and more accurate value estimates for the company and its planned projects.