THE EFFECT OF MANAGERIAL OWNERSHIP ON THE RELATIONSHIP BETWEEN FREE CASH FLOWS AND INVESTMENT INEFFICIENCY

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ABDI RASOOL; ZEYNALI MAHDI; TAGHIZADEH KHANGHAH V.

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Journal: The Financial Accounting and Auditing Researches Year:2017 | Volume:9 | Issue:35 Page(s): 157-185

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Title

THE EFFECT OF MANAGERIAL OWNERSHIP ON THE RELATIONSHIP BETWEEN FREE CASH FLOWS AND INVESTMENT INEFFICIENCY

Author(s)

ABDI RASOOL | ZEYNALI MAHDI | TAGHIZADEH KHANGHAH V. | Issue Writer Certificate

Keywords

MANAGERIAL OWNERSHIPQ2

FREE CASH FLOWQ2

OVER INVESTMENTQ1

UNDER INVESTMENTQ2

Abstract

The widely held view is that higher MANAGERIAL OWNERSHIP is a valuable mechanism for shareholders because it aligns the interests of managers better with those of shareholders would make one concerned about the over availability of managers to FREE CASH FLOW. Thus, in companies that managers have greater access to FREE CASH FLOW, the probability that the investment decisions to be taken out of optimal form is more. Hence the present study with revealing an aspect of MANAGERIAL OWNERSHIP consequences in Iran, examines the impact of MANAGERIAL OWNERSHIP on the relationship between FREE CASH FLOW and investment inefficiency at listed companies in Tehran Stock Exchange. In this regard, the numbers of 110 companies for the period 2007-2014 with deletion sampling method was chosen. We use Lehn & Poulsen (1989) model for measuring FREE CASH FLOW, and Biddle et al (2009) model for measuring the investment inefficiency. The panel data was used to test the hypothesis. The results of the test hypothesis are show that the MANAGERIAL OWNERSHIP undermines the positive relationship between FREE CASH FLOWs and inefficiency investment. Thus, Board members will help to increase investment efficiency with the effective supervisory on amount of FREE CASH FLOW. However, if companies are divided into two groups of over and under investor, MANAGERIAL OWNERSHIP by limiting the amount of FREE CASH FLOW available, reduce the problems of OVER INVESTMENT, but it has no effect in reducing problems of UNDER INVESTMENT.

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APA: Copy

ABDI, RASOOL, ZEYNALI, MAHDI, & TAGHIZADEH KHANGHAH, V.. (2017). THE EFFECT OF MANAGERIAL OWNERSHIP ON THE RELATIONSHIP BETWEEN FREE CASH FLOWS AND INVESTMENT INEFFICIENCY. THE FINANCIAL ACCOUNTING AND AUDITING RESEARCHES, 9(35 ), 157-185. SID. https://sid.ir/paper/197937/en

Vancouver: Copy

ABDI RASOOL, ZEYNALI MAHDI, TAGHIZADEH KHANGHAH V.. THE EFFECT OF MANAGERIAL OWNERSHIP ON THE RELATIONSHIP BETWEEN FREE CASH FLOWS AND INVESTMENT INEFFICIENCY. THE FINANCIAL ACCOUNTING AND AUDITING RESEARCHES[Internet]. 2017;9(35 ):157-185. Available from: https://sid.ir/paper/197937/en

IEEE: Copy

RASOOL ABDI, MAHDI ZEYNALI, and V. TAGHIZADEH KHANGHAH, “THE EFFECT OF MANAGERIAL OWNERSHIP ON THE RELATIONSHIP BETWEEN FREE CASH FLOWS AND INVESTMENT INEFFICIENCY,” THE FINANCIAL ACCOUNTING AND AUDITING RESEARCHES, vol. 9, no. 35 , pp. 157–185, 2017, [Online]. Available: https://sid.ir/paper/197937/en

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