Mostafa Abdi; Hassan Zalaghi; Mahdi Kazemi Olum; Majid Aligiglo
Abstract
According to the agency theory, the existence of effective corporate governance mechanisms (audit committee) can solve the problems associated with agency issues and, as a result, reduces the free cash flow of companies. However, according to the transaction costs theory, the existence of quality corporate ...
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According to the agency theory, the existence of effective corporate governance mechanisms (audit committee) can solve the problems associated with agency issues and, as a result, reduces the free cash flow of companies. However, according to the transaction costs theory, the existence of quality corporate governance mechanisms not only does not reduce the level of these types of flows, but even leads to the increase in free cash flow due to the lower cost of these types of internal financing in comparison with other financing methods. Therefore, the purpose of this study is to investigate the relationship between the audit committee's characteristics (size, independence, financial expertise, and gender of the members of the audit committee) and the free cash flow in companies admitted to Tehran Stock Exchange during the period from 2014 to 2018. The research hypotheses were tested using regression analysis and unbalanced combination data approach. The research findings indicate that there is a positive and significant relationship between the characteristics of size, independence, financial expertise, and gender of the members of the audit committee and free cash flow. These findings are in line with the transaction costs theory. The research findings also lead to the development of theoretical and experimental literature on the effectiveness of the role of audit committees in the field of company risk management with an emphasis on liquidity management and free cash flows.
Gh. Kordestanim Kordestani; M. Akbari
Volume 8, Issue 29 , April 2010, , Pages 39-64
Abstract
Fama and French (1992) observe that book-to-price (B/P) ratios are positively correlated with subsequent stock returns, a relation that has come to be known as the book-to-price effect and Penman, Richardson, and Tuna (2007) explains that The B/P ratio can be decomposed into an enterprise ...
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Fama and French (1992) observe that book-to-price (B/P) ratios are positively correlated with subsequent stock returns, a relation that has come to be known as the book-to-price effect and Penman, Richardson, and Tuna (2007) explains that The B/P ratio can be decomposed into an enterprise book-to-price (that pertains to operations and potentially reflects operating risk) and a leverage component (that reflects financing risk). Also, this paper is decomposed the B/P ratio into operating (NOA/PNOA) and leverage
(ND/P) components and examined the components of book-to-price effect in stock returns with using annual cross-sectional that explains both the components effect. The final sample used in this analysis consists of 1,411 firm-years (225 companies) for the years 1998-2007.
The empirical analysis shows that the enterprise book-to-price ratio is positively (not significantly) related to subsequent stock returns but, the leverage component of B/P is negatively associated with future stock returns (excluding firm-year observations with NOA/PNOA ≥1). Further, investigation shows that the beta is positively related to subsequent stock returns but, the size is negatively associated with future stock returns that both higher than leverage component of B/P.
M. Azizkhani; N. Khodadadi
Volume 6, Issue 24 , January 2009, , Pages 53-78
Abstract
This paper examines the effects of advertising expenditures on firm's intangible value in the Tehran Stock Exchange (TSE) listed companies. Using Q Tobin to estimate firm's intangible value and for a sample of 389 firm-year observation during 1380-1385, we find that there is a negative ...
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This paper examines the effects of advertising expenditures on firm's intangible value in the Tehran Stock Exchange (TSE) listed companies. Using Q Tobin to estimate firm's intangible value and for a sample of 389 firm-year observation during 1380-1385, we find that there is a negative association between firm's advertising expenditures and intangible value. We also find that there is no association between advertising expenditure, sales and profit.
Omid Poorheidari; Mahmood Kohansal
Volume 3, Issue 9 , April 2005, , Pages 27-41
Abstract
The role of accounting information in setting security prices is one of the most fundamental issues in accounting. The purpose of this study is to extend the research on the value relevance of accounting numbers in two important directions. Firstly, we consider the Iran context and analyze if earnings ...
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The role of accounting information in setting security prices is one of the most fundamental issues in accounting. The purpose of this study is to extend the research on the value relevance of accounting numbers in two important directions. Firstly, we consider the Iran context and analyze if earnings and/or cash flows are relevant to explain stock returns. Secondly, we investigate how firm-specific attributes such as size, leverage and firm life-cycle influence the relative relevance of accounting measures (earnings and cash. flows). Our results support a linear relationship between stock returns and accounting variables. They indicate also that the relevance of earnings is conditional on size, debt level and life cycle of the firm. In contrast, the earning change reveals more information when the firms are small, mature and leverage firms. With regards to cash flows, we find that they do not reveal additional information beyond that contained in earnings.
