Empirical Studies in Financial Accounting

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 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.

Abstract The goal of this paper is to examine the association between product market
competition and corporate investment decisions on particularly, over investment and low investment.
The managers have different incentives to keep cash in firms. Product market competition is another
powerful mechanism ensuring that management does not waste resources. When competition exists,
shareholders can observe performance in other firms and use this information as a benchmark to
evaluate managers. The aim of this research is to investigate impact of product market competition
and Interactive relationship between product market competition and free cash flow on over-
investment and low- investment in free cash flow. The Herfindahl-Hirschman index was used as
measures of competitiveness. The sample consisted of 110 companies listed in Tehran Stock Exchange
from 10 different industries over the period 2010 to 2015. Research findings indicate that there is
no significant positive relationship between Herfindahl- Hirschman with the low_ investment and
over_ investment. The interactive effect of product market competition on a negative free cash flow
has significant relationship with low investment.

Abstract This paper investigates the relationship between free cash flow, life cycle and dividend policy in Tehran Stock Exchange listed companies during 2002-2009. Using 304 company-year and conducting OLS Regression model, results revealed that there are no significant relationship between dividend policy and free cash flow, which is not consistent with free cash flow hypothesis and the relationship with dividend policy in prior researches (Fama and French, 2001; Grullon and et al., 2002 and Deangelo and et al., 2006). The findings also reveal that there are no significant relationship between companies' life cycle and their dividend policies.