This document discusses corporate governance and its relationship to free cash flow. It reviews previous research that found mixed relationships between cash holdings and various governance mechanisms. The author proposes to study the relationship between free cash flow of Tehran-listed companies and three governance factors: the percentage of institutional investors, the percentage of independent board members, and the level of government influence. The author will use regression analysis to test hypotheses about the significance and direction of the relationships between these governance indicators and free cash flow levels.
The objective of this research is to study the managers' overconfidence effect on the relationship
between the firm risk and managers' rewards of the listed firms in the Tehran Stock Exchange. In addition, the
research sample had 136 members which were selected in 2012-2019 using the systematic removal sampling
method by considering the research variables conditions
Post privatization Corporate Governance and the challenges of working capital...inventionjournals
The paper examines the impact of Corporate Governance on liquidity ratio of Ashaka Cement Company. The variables studied were activity ratio as dependent variables and Corporate Governance proxies as independent variables. Data was collected from the secondary sources, and the statistical tools employed in the Methodology were; Performance Trend Analysis and OLS regression. Trend Analysis result suggests that, liquidity ratio was higher pre privatization periods. Inferential Statistics Result suggests that, minority ownership, board size and privatization have positive and significant impact on liquidity ratio of Ashaka Cement Company, while, Total Market Value of Shares and percentage of non executive directors have negative and significant impact on liquidity ratio of Ashaka Cement Company. However, workforce has positive and insignificant impact on liquidity ratio. The study concludes that, corporate governance has significant impact on liquidity ratio of Ashaka Cement Company. However, unfavourable macroeconomic environment militated against its efficiency. The study recommends that, Nigerian government should ensure favorable macroeconomic environment, Foreign Investors should secure global cement market opportunities to justify investment and enhance companies’ earnings The findings may useful to corporate stakeholders and government policy makers
Corporate Governance and Corporate Profitability Empirical Study of Listed La...ijtsrd
Corporate governance is concerned with ways in which all parties interested in the well- being of the organization attempt to ensure that mangers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders.. The purpose of the study is to find out the impact of corporate governance on profitability of listed Land and Property companies in Sri Lanka. Return of Assets is used as dependent variable. To measure the corporate governance, Board size, Board composition and independent directors of Remuneration committee. number of auditors are considered in this study. Firm size was considered as control variable in this study. The data were collected from firms annual financial reports and Data Stream over the period of 2011to 2016, from the CSE website. Descriptive statistics, correlation analysis, multiple linear regression analysis were used to analyse the data and examine the hypotheses by using the E-views 10 version, in this study. The findings revealed that there is a positive and significant relationship between ROA with auditors, board composition. Independent directors of Remuneration committee and board size are insignificantly correlated with ROA. Furthermore, it was found that the control variable firm size was insignificant in influencing firm performance ROA ..This study provides useful information for policy makers, regulators in improving the corporate governance policies in the future and also helps in increasing and understanding the relationship between corporate governance and firms performance. S. Anandasayanan | H. Thavarasasingam "Corporate Governance and Corporate Profitability: Empirical Study of Listed Land and Property Companies in Sri Lanka" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-2 , February 2019, URL: https://www.ijtsrd.com/papers/ijtsrd20309.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/20309/corporate-governance-and-corporate-profitability-empirical-study-of-listed-land-and-property-companies-in-sri-lanka/s-anandasayanan
The objective of this research is to study the managers' overconfidence effect on the relationship
between the firm risk and managers' rewards of the listed firms in the Tehran Stock Exchange. In addition, the
research sample had 136 members which were selected in 2012-2019 using the systematic removal sampling
method by considering the research variables conditions
Post privatization Corporate Governance and the challenges of working capital...inventionjournals
The paper examines the impact of Corporate Governance on liquidity ratio of Ashaka Cement Company. The variables studied were activity ratio as dependent variables and Corporate Governance proxies as independent variables. Data was collected from the secondary sources, and the statistical tools employed in the Methodology were; Performance Trend Analysis and OLS regression. Trend Analysis result suggests that, liquidity ratio was higher pre privatization periods. Inferential Statistics Result suggests that, minority ownership, board size and privatization have positive and significant impact on liquidity ratio of Ashaka Cement Company, while, Total Market Value of Shares and percentage of non executive directors have negative and significant impact on liquidity ratio of Ashaka Cement Company. However, workforce has positive and insignificant impact on liquidity ratio. The study concludes that, corporate governance has significant impact on liquidity ratio of Ashaka Cement Company. However, unfavourable macroeconomic environment militated against its efficiency. The study recommends that, Nigerian government should ensure favorable macroeconomic environment, Foreign Investors should secure global cement market opportunities to justify investment and enhance companies’ earnings The findings may useful to corporate stakeholders and government policy makers
Corporate Governance and Corporate Profitability Empirical Study of Listed La...ijtsrd
Corporate governance is concerned with ways in which all parties interested in the well- being of the organization attempt to ensure that mangers and other insiders take measures or adopt mechanisms that safeguard the interests of the stakeholders.. The purpose of the study is to find out the impact of corporate governance on profitability of listed Land and Property companies in Sri Lanka. Return of Assets is used as dependent variable. To measure the corporate governance, Board size, Board composition and independent directors of Remuneration committee. number of auditors are considered in this study. Firm size was considered as control variable in this study. The data were collected from firms annual financial reports and Data Stream over the period of 2011to 2016, from the CSE website. Descriptive statistics, correlation analysis, multiple linear regression analysis were used to analyse the data and examine the hypotheses by using the E-views 10 version, in this study. The findings revealed that there is a positive and significant relationship between ROA with auditors, board composition. Independent directors of Remuneration committee and board size are insignificantly correlated with ROA. Furthermore, it was found that the control variable firm size was insignificant in influencing firm performance ROA ..This study provides useful information for policy makers, regulators in improving the corporate governance policies in the future and also helps in increasing and understanding the relationship between corporate governance and firms performance. S. Anandasayanan | H. Thavarasasingam "Corporate Governance and Corporate Profitability: Empirical Study of Listed Land and Property Companies in Sri Lanka" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-2 , February 2019, URL: https://www.ijtsrd.com/papers/ijtsrd20309.pdf
Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/20309/corporate-governance-and-corporate-profitability-empirical-study-of-listed-land-and-property-companies-in-sri-lanka/s-anandasayanan
Practices of Corporate Governance in the Banking Sector of Bangladeshijmvsc
Corporate governance became an area of huge interes
t after the collapse of few giant firms, like Enron
Corporation, MCI Inc. etc. Banking sector portraits
the whole economy of a country. Bangladesh Bank, t
he
central bank of Bangladesh, provides guidelines for
the banking sector and all commercial banks have t
o
follow those guidelines in order to operate their b
usiness in Bangladesh. If financial sector collapse
s, the
whole economy will also collapse. Hallmark Group ma
de a BDT 4000 crore scam. Six commercial banks
were involved with BDT 200 crore loan scam of Bismi
llah Group. Basic Bank scam of BDT 4,500 crore
loan approval without proper documentation and scru
tiny has brought the issue to the fore again. Such
fraudulent activities indicate lack of corporate go
vernance practices in the banks. So, this study was
initiated to critically observe the current Corpora
te Governance status and practices in the banking s
ector
of Bangladesh. The study was descriptive in nature.
Convenient sampling method was used to select the
sample banks for the study. The study found that to
p management influence as well as political pressur
e
exists in banking sector which affect the lending d
ecisions. Corrupted bankers and dishonest officials
of
Bangladesh Bank were found associated with several
scams. Proper documentation is mandatory but
sometimes banks show flexibility in this regards an
d provide extra benefits to the clients. Selection
of
wrong borrower, unhealthy competition among the ban
ks, fund diversion, inefficient auditing and
insufficient collateral cause major harm to the ban
ks. Sometimes banks do not follow the rules and
guidelines provided by Bangladesh Bank properly whi
ch were actually designed to protect themselves and
operate business smoothly
IOSR Journal of Business and Management (IOSR-JBM) is an open access international journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Capital Structure andCorporate Governance practices. Evidence from Listed Non...IOSR Journals
This paper examines the impact of corporate governance on capital structure for firms listed on NSE Kenya. The total population of non-financial firms is 50.A sample of 30 companies whose data for 5 years from 2007-2011 was selected. The study uses five corporate governance proxies: Board size (BS), Ownership concentration (ONC), Institutional share ratio (ISR), CEO duality (CED), Board independence (BI) as independent variables. Four capital structures variables are: Long term debt to asset ratio (LTDA), Short term debt to asset ratio (STDA), Debt equity ratio (DE), and Total debt to asset ratio (TD) as dependent variables. The analysis used both descriptive and inferential analysis where correlation and linear regression were used.An average of 7 directors are on the board of firms with 93% of firms CEO doubling as a director.Using model 1 regression equation positive correlation is shown between TD with corporate governance proxies CED which is significant at 95% significant level. Using model 2 regression equation size of the firmSz taken as natural logarithm of sales as a moderating variable CED is negatively correlated to STD and DE and is significant implying firms tend to adopt pecking order theory to avoid more debt
Unit 1 Introduction to Corporate Governance
Unit 2 Theory of the Firm
Unit 3 Corporate Governance and the Role of Law
Unit 4 Corporate Governance Around the World
Unit 5 Board Composition and Control
Unit 6 CEO Compensation
Unit 7 International Governance
Unit 8 Overview of Corporate Governance Codes
Practices of Corporate Governance in the Banking Sector of Bangladeshijmvsc
Corporate governance became an area of huge interes
t after the collapse of few giant firms, like Enron
Corporation, MCI Inc. etc. Banking sector portraits
the whole economy of a country. Bangladesh Bank, t
he
central bank of Bangladesh, provides guidelines for
the banking sector and all commercial banks have t
o
follow those guidelines in order to operate their b
usiness in Bangladesh. If financial sector collapse
s, the
whole economy will also collapse. Hallmark Group ma
de a BDT 4000 crore scam. Six commercial banks
were involved with BDT 200 crore loan scam of Bismi
llah Group. Basic Bank scam of BDT 4,500 crore
loan approval without proper documentation and scru
tiny has brought the issue to the fore again. Such
fraudulent activities indicate lack of corporate go
vernance practices in the banks. So, this study was
initiated to critically observe the current Corpora
te Governance status and practices in the banking s
ector
of Bangladesh. The study was descriptive in nature.
Convenient sampling method was used to select the
sample banks for the study. The study found that to
p management influence as well as political pressur
e
exists in banking sector which affect the lending d
ecisions. Corrupted bankers and dishonest officials
of
Bangladesh Bank were found associated with several
scams. Proper documentation is mandatory but
sometimes banks show flexibility in this regards an
d provide extra benefits to the clients. Selection
of
wrong borrower, unhealthy competition among the ban
ks, fund diversion, inefficient auditing and
insufficient collateral cause major harm to the ban
ks. Sometimes banks do not follow the rules and
guidelines provided by Bangladesh Bank properly whi
ch were actually designed to protect themselves and
operate business smoothly
IOSR Journal of Business and Management (IOSR-JBM) is an open access international journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Capital Structure andCorporate Governance practices. Evidence from Listed Non...IOSR Journals
This paper examines the impact of corporate governance on capital structure for firms listed on NSE Kenya. The total population of non-financial firms is 50.A sample of 30 companies whose data for 5 years from 2007-2011 was selected. The study uses five corporate governance proxies: Board size (BS), Ownership concentration (ONC), Institutional share ratio (ISR), CEO duality (CED), Board independence (BI) as independent variables. Four capital structures variables are: Long term debt to asset ratio (LTDA), Short term debt to asset ratio (STDA), Debt equity ratio (DE), and Total debt to asset ratio (TD) as dependent variables. The analysis used both descriptive and inferential analysis where correlation and linear regression were used.An average of 7 directors are on the board of firms with 93% of firms CEO doubling as a director.Using model 1 regression equation positive correlation is shown between TD with corporate governance proxies CED which is significant at 95% significant level. Using model 2 regression equation size of the firmSz taken as natural logarithm of sales as a moderating variable CED is negatively correlated to STD and DE and is significant implying firms tend to adopt pecking order theory to avoid more debt
Unit 1 Introduction to Corporate Governance
Unit 2 Theory of the Firm
Unit 3 Corporate Governance and the Role of Law
Unit 4 Corporate Governance Around the World
Unit 5 Board Composition and Control
Unit 6 CEO Compensation
Unit 7 International Governance
Unit 8 Overview of Corporate Governance Codes
Investigating Corporate Governance And Its Effect on Firm Performance with As...QUESTJOURNAL
ABSTRACT: Corporate governance and its effect on firm performance are investigated in this research. Research independent variables include non-bound members of board of directors, board of directors’ independence, institutional shareholders, and dependent variable includes assets return which is the index of firm’s performance. Accordingly, data of 125 accepted firms in Tehran securities exchange during 2009 to 2013 was extracted and panel data regression model was applied to test the hypotheses. Results indicate an inverse significant relationship between non-bound members of board of directors and assets return and a positive significant relationship between board of directors’ independence and firm’s performance. Also, there is a positive relationship between institutional shareholders and firm’s performance. In general, results showed that appropriate corporate governance improves firms’ performance.
Corporate governance and bank performance: Empirical evidence from Nepalese f...Rajesh Gupta
This paper examines the effects of corporate governance on bank performance in the context of Nepal. Return on assets (ROA) and return on equity (ROE) are dependent variables for bank performance, and board size, female board members, financial institutions, CEO duality, independent directors, firm size, firm age, earnings per share, and the capital adequacy ratio are independent variables for corporate governance.
Abstract:- This study aims to determine the effect of Good Corporate Governance mechanism and Financial Performance on firm value in banking companies. The method used in this research is research method of descriptive associative. The analytical tool used is multiple linear regressions, processed by using SPSS program version 23. The results obtained are partially there is a negative influence of Good Corporate Governance mechanism (independent board of commissioner, institutional ownership, and audit committee) on the value of the company and there is positive influence profitability (ROE) on firm value. While simultaneously, there is influence together mechanism of Good Corporate Governance and profitability to company value. The suggestion is that companies should consider the implementation of Good Corporate Governance and to measure the company's financial performance can use other measurements such as ROA and NPM. While to measure the company's value can also use other measurements such as Price Earnings Ratio (PER) or Tobin's Q.
Summary of Research on Financial Governance TheoryYogeshIJTSRD
Since the theory of financial governance came into being in my country’s academic circles, scholars have systematically studied financial governance in terms of the connotation, system, subject, and object of financial governance on the basis of foreign research and based on my country’s financial practice. A relatively complete theory of financial governance. But in general, due to the short research time, the research perspective is not comprehensive enough, and the research needs to be further enriched and developed. Zhang Yue "Summary of Research on Financial Governance Theory" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd44982.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/44982/summary-of-research-on-financial-governance-theory/zhang-yue
Running Head CAPITAL DECISIONS1CAPITAL DECISIONS .docxjoellemurphey
Running Head: CAPITAL DECISIONS 1
CAPITAL DECISIONS 1
Capital Decisions
Keri King
Module 4
5/3/2020
Introduction
To meet operational costs, expense obligations, and make investments, every organization needs to ensure that its capital management is under the right hands. The individuals tasked with capital management ensure that capital and assets are well organized to facilitate expansion. For this to happen, organizations need to ensure that they evaluate their financial statements and financial analysis methods. These methods help organizations make appropriate decisions regarding capital investments, which is critical for growth. Hence, this report will analyze two articles that provide an in-depth analysis of the financial matters of healthcare companies.
Article Review 1
In his book, Argan (2013) states that healthcare companies face a harder time acquiring expansion financing because of their liquidity ratio. The author further explains that healthcare companies face a harder time purchasing short-term liquidity due to their inability to make profits as fast as they generate sales. The expansion of a healthcare center might take more time than the original estimated time, which then causes a push back in the timeline given by financial institutions to start the repayment plan. In most cases, other financial or lending institutions have the needed amount organizations ask for and also provide thorough advice on whether the investment is worth the risk.
Argan (2013) states that the two major issues brought up by the turnaround company on the Caribbean expansion were one: the weakness in their corporate structure and the management reporting and ranks. The concerns around this came up because the turnaround company wondered if the institution had proper management controls in place to ensure high profitability as well as quality (Argan, 2013). High quality comes with high profitability because people need assurance on the condition they receive. The turnaround company also brought up the issue of management controls to ensure that ethics can apply in the organization in support of the right decision making.
Healthcare facilities require looking for other means of securing their finances beyond their banks. According to Argan (2013), other financial institutions, aside from banks, offer lower interest rates, are more flexible, which are luring factors to consider. In his article, the author states that securing financing beyond banks gives companies a better chance of expansion as opposed to looking for finances in banks.
Article Review 2
In the article, the authors make a good argument for the need for broadening the methods which healthcare providers use to calculate break-even analysis. Through the different options, the authors show different sectors where hospitals lose money they should be gaining ...
Impact of Corporate Governance on Firms’ Financial Performance: Textile Secto...inventionjournals
Purpose: The basic standard of this article is to find out the outcome of corporate governance on firm’s profitability in textile sector of listed companies in Pakistan. Methodology: The data are collected from respective textile sector annual reports from 2005 to 2014.The results of different variables arise by using different techniques like descriptive, correlation and regression in using software of E-views in this study. Findings: These results of study explain that corporate governance and firm’s financial performance shows positive relationship between each other. This indicates that in textile sectors adopting corporate governance and plays a significant role in textile sectors. Research limitations: This study restricts by fewer digit of determinantslinked corporategovernance and data gathered from 2005 to 2014 were addressed, which restrictions the overview of the result. Further research can be conduct by using more variables and more years for finding more in future. Originality: This study shows that the firm’s performance has increased by using corporate governance in textile sector firms.
Impact of Corporate Governance on Firms’ Financial Performance: Textile Secto...inventionjournals
Purpose: The basic standard of this article is to find out the outcome of corporate governance on firm’s profitability in textile sector of listed companies in Pakistan. Methodology: The data are collected from respective textile sector annual reports from 2005 to 2014.The results of different variables arise by using different techniques like descriptive, correlation and regression in using software of E-views in this study. Findings: These results of study explain that corporate governance and firm’s financial performance shows positive relationship between each other. This indicates that in textile sectors adopting corporate governance and plays a significant role in textile sectors. Research limitations: This study restricts by fewer digit of determinantslinked corporategovernance and data gathered from 2005 to 2014 were addressed, which restrictions the overview of the result. Further research can be conduct by using more variables and more years for finding more in future. Originality: This study shows that the firm’s performance has increased by using corporate governance in textile sector firms.
Corporate Governance and Its Impact on Financial Performance in Nepalese Comm...IJMREMJournal
Corporate governance is about building credibility, ensuring transparency and accountability as well as
maintaining aneffective channel of information disclosure that would foster good corporate performance.
Corporate governance is the extent to which companies are run in an open and honest manner is important for
overall market confidence. Corporate governance describes all of the devices, institutions, and mechanisms by
which corporations are governed. The basic objective of the study is to analyze the level and structure of
corporate governance in Nepal and determine its effects on financial performance in commercial banks of
Nepal. Descriptive research design has been followed and multistage sampling method is used. Both primary as
well as secondary data have been used to collect the information. It is found that corporate governance has
played the significant role to keep the corporate governance in Nepalese commercial Banks
The influence of managerial ownership,institutional ownership and voluntaryd...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
This study examines the relationship between corporate governance and risk falling stock prices
according to the type of ownership of the company on the Stock Exchange of Tehran. For this study, a sample of
4 companies listed companies in Tehran Stock Exchange were selected using random sampling method. In this
study, the relationship between corporate governance and risk falling stock prices according to the type of
company ownership in Tehran Stock Exchange for the period 1389 to 1393 was A total of 470 observed for the
period was used Who has 70 years of institutional ownership companies And 400 data related to companies with
ownership of the company. The statistical methods used in this research is multiple regression method. The
results show that the risk of falling standards of corporate governance in companies owned firm's stock price So
that the effectiveness of the board, board structure and governance structure, risk of falling stock prices on
corporate ownership in companies with significant effect in reverse. But institutional ownership in companies
with corporate governance criteria in danger of falling stock prices have no effect.
Literature Review on the Relationship between Board.pdf
Verifying the relationship between free cash flow and mechanisms of corporate governance in listed companies in Tehran stock exchange
1. Introduction:
In a general view, corporate governance includes legal, cultural and
institutional arrangements which determines the direction and
function of the companies. The elements which are present at the
scene are: shareholders and ownership structure, board of directors
and their compounds, company management who is guided by
managing director or higher manager and other beneficiaries who
may have effects on the company.
Governance system is Corporate considered as a monitoring
mechanism and controlling the finance and management behaviors.
And these systems will be developed in coordination with legal and
cultural system of each company, and its mechanism will be formed
according to these conditions. Most important components of the
system in the company are bound and non-bound members of the
board, their independence from the executive directors, presence or
absence of committees including audit committee and presence of
institutional investors. If these components and mechanisms are
applied well, then observe and control will be properly implemented.
Managers of private units in different situations, according to internal
and external factors of private unit and with attention to risk and
returns, we should select proper strategy for assets, liabilities,
revenues and expenditures. If the type of selected strategy in certain
position is suitable then there will be access to best strategy for
managing assets, liabilities, revenues and expenditures. Creating
balance in said factors are of particular importance. As deciding on
one will impact on the other. Meanwhile, entry and exit of the cash in
a private unit are the most fundamental issues that underlie many of
2. the decisions and judgments of investors, creditors and some other
major groups of financial information users.
Investors and creditors show interest to invest and give credit to
business units that have high operating cash flow. And avoid to invest
and give credit to those business units that do not have high
operating cash flow. Therefore those institutions that result of their
normal activities is negative cash flow, can`t finance their shortage of
funds from other activities just like activities of finance and
investment. Because, ability of an institution in increasing cash
through financing activities is related mostly to cash that gained from
free activities. In case, a company is not having sufficient cash to pay
the debt in maturity time, interest of shares and fulfillment of
obligations, then creditors and investors are not willing to invest in
the said company. For example, one of the loans main risks is
abnormal levels of cash flows as a result of early payment of loan
instalments. So risk of early payment is distributed equally between
gained loans. To increase the accuracy of prediction in cash currents,
corporate mechanisms will be verified from different directions. Some
of the managers, will determine their optimal level with balance
between benefits and cost of holding cash. In fact, managers will
manage their optimal level of cash with determination of importance
of the final cost and final interests, from holding cash. Thus, there is
an appropriate level of cash for managers, where management will
decide actively upon analyze of cost-benefit in relation to cash
keeping. Therefore with importance of free cash in performance of
the company, we became interested in doing a research in the said
field and do a research about a relation between free cash flow and
some of the corporate mechanisms for corporates that are members
in Tehran stock exchange.
3. Research background:
HARFORD and coworkers used a sample for 1872 corporates to
examine the relation between holding cash and corporate governance
structure. The result showed, corporates with more internal
governance and more institutional governance percentage have more
cash hold, but other corporates with higher quality in corporate
governance and bigger board of directors and more independent have
lesser cash hold.
LEE selected a sample containing 1061 companies, during 2001 - 2005
in five Asian countries (Malaysia, Philippine, India, Singapore and
Thailand) and then said: if board members act as corporate
governance role in Asian countries, so we can predict, corporates with
stronger management structure (more percentage of non-duty
members of the board and….), after controlling other factors, will
have lesser cash hold. Analysis started with test relation between
cash hold, board structure and management governance structure.
After controlling other significant factors of cash hold, it is resulted
that corporates with more share of non-duty managers in board,
different posts of general director and head of the board and smaller
board are having lesser cash hold.
GENI and coworkers in their research, verified the cash balance in
Japan, France, Germany and England. And in their study, used 3989
data of companies during 1983 to 2000.their finding showed legal
structure of the country and governance structure are having
important role in determination of cash hold deposit. They realized
that higher protection about shareholders has relation with lesser
4. cash. And concentration on governance is having negative effect on
remained cash.
GARSIA and coworkers, with using organized sample from stock
exchange corporates in Spain during 1995- 2001, searched about audit
quality effect on corporate`s cash balance. In this research, they used
the OZKAN adjusted model. Results of the said research show that
corporates with high accruals quality in comparing corporates with
low accruals quality, hold lower levels of cash balance. Findings show,
with increase in bank debt, cash balance will increase and those
companies which have higher cash flow, shall keep more cash.
AGHAEE and coworkers, searched about effective factors on keeping
cash balances in accepted corporates in Tehran stock exchange. Their
selected sample was consisted of 283 organizations and time period
for their study was from 2000-2005. Result of their research shows
that receivable accounts, net working capital, inventories and short
term debts are having negative effects on keeping cash balances,
respectively. On the other side, growth opportunities of corporate,
dividend, fluctuations in cash flows and net profit are the most
important factors which have positive factor on holding cash
balances. But there are no sufficient proves about negative effects of
long term debts and corporates size on keeping cash balances,
respectively.
TEHRANI and HESARZADE, paid survey about effect of free cash flows
and financing constraints on more investment and less investment in
120 listed corporates of Tehran stock exchange during time period of
2000-2006. Results of the research showed that there is a direct
relation between free and cash flows and more investment and in
statistical view, it is significant. Meanwhile, between financing
5. constraints and less investment in accepted corporates of Tehran
stock exchange, there is no significant relation.
Problem`s statement and research hypotheses:
Regulatory mechanisms of corporate governance, are important and
effective factors on free cash flows of corporates. How to employ free
cash flow is an important and opposite decision between
shareholders and managers. During economic growth of corporate, as
cash deposits grow, managers will decide, whether to distribute the
free cash among shareholders, or to be spend on internal
expenditure, or should be spend on employee`s study abroad or to
keep it as it is? Whether benefit seeking managers will choose to use
or keep the cash deposits, is not clear. Managers should compare
personal expenses of current expenditure with flexibility which comes
out from free cash flow. In addition, benefit seeking managers must
measure probability of profits excess on expenditures due to holding
more cash.in this context, institutional investors and non-duty
members, can have an important role in conducting free cash flow
reserves and with controlling the behavior of managers, can avoid the
profit excess on expenditures due to keeping free cash flow. And one
more thing, governance influence rate of government is another
effective factor on free cash flow. In Iran there are no plenty of
researches about relation of monitoring mechanism in corporate
governance and free cash flow of companies. Therefore the main goal
of this research is to verify the relation of some of corporate`s
governance mechanisms which is consisted of institutional investors
percentage, board`s non-duty members percentage and government
influence rate as independent variables and free cash flow as
dependent variable in Tehran stock exchange.
6. Theories of research:
1-There is a significant relationship between free cash flow and the
percentage of institutional investors in Tehran stock exchange.
2- There is a significant relationship between free cash flow and the
percentage of non-duty members of the board in Tehran stock
exchange.
3-There is a significant relationship between free cash flow and the
governance influence rate of government.
Method of research:
This research in case of goal is an applied study, and in case of
methodology is solidarity research of post events. In this research to
test the theories, they used multiple regression with model of
multivariate base.
This study has three theories. The free cash flow variable was used in
all the three theories. For the first and second hypotheses, each of
variables INSTOWN, institutional governance percentage and OUTD,
non-duty board members percentage, calculated separately. Then in
both the theories, the relationship between free cash flow INSTOWN,
institutional governance percentage and OUTD, non-duty board
members percentage, using Pearson`s solidarity test and regression
statistical model, have been studied. But for the third hypothesis, for
the variable GI, governance and influence rate of government, the
comparison of means to compare the distribution of a variable in
7. different groups were used. And data was analyzed. Then test of this
theory was examined by Pearson`s solidarity test and regression
statistical model. Time domain of this research was from 2007-2011.
Spatial domain was Tehran stock exchange.
Test of hypothesis:
First theory: there is a significant relationship between free cash flow
and the percentage of institutional investors in Tehran stock
exchange.
To verify the relation between FCF and INSTOWN, we use variance
analyze table:
Since PVALUE that means %21/7 is larger than which is %5,
therefore in significant level of %5, the assumption :1H (there is
relation) is rejected and assumption :H (no relation) is accepted.
It is concluded that in the significance level of %5, between free cash
flow opportunities (FCF) and the percentage of institutional
ownership (INSTOWN), there is no relationship. So there is no need of
regression underlying assumptions test. And we can`t find any
relation between these two variables of linear regression model, to be
significant in statistical case.
Second theory: there is a significant relationship between free cash
flow and non-duty members of the board in Tehran stock exchange.
Results from regression test to verify the relation of FCF and OUTD in
variance analyze table and regression equation is as follow:
For all the hypotheses of the study, error level of %5 (significant level
of %5= ) it means, confidence level is considered as %95.
Based on this test.
8. 1H Is rejected, whereas %pvalue
1H Is accepted, whereas %pvalue
Because the PVALUE, it means 001/0 is less than which is %5, thus
in significant level =%5, assuming :H (lack of relation) is
rejected. And assumption of :1H (there is relation) is accepted.
And concluded that in significant level of %5, there is a relation
between free cash flow (FCF) and non-duty member percentage
(OUTD). Since the beta coefficient is negative (OUTD 0.663-), there is
an inverse relationship between free cash flow (FCF) and non-duty
members percentage (OUTD).
Third theory:
There is a significant relationship between free cash flow and
influence rate of government ownership.
The concluded result from regression test to examine the relation of
FCF and GI in the variance analyze table and regression equation is as
follow:
Because the PVALUE, it means 001/0 is less than which is %5, thus
in significant level =%5, assuming :H (lack of relation) is
rejected. And assumption of :1H (there is relation) is accepted.
And concluded that in significant level of %5, there is a relation
between free cash flow (FCF) and influence rate of government
ownership (GI). Since the beta coefficient (GI 4.52) is positive, there is
9. a direct relationship between free cash flow (FCF) and influence rate
of government ownership (GI).
Summary of research results:
Summary of theories test results:
10. Interpretation
of results
Result of
statistical
test
Statistical
methods
Description
There is no
significant
relation
between free
cash flow and
institutional
investors
percentage
H
Assumption
is not
rejected
Solidarity
test and
linear
regression
First theory
There is
significant
relation
between free
cash flow and
non-duty
members
percentage
H
Assumption
is rejected
Solidarity
test and
linear
regression
Second theory
There is
significant
relation
between free
cash flow and
influence rate
of
government
ownership
H
Assumption
is rejected
Solidarity
test and
linear
regression
Third theory