Cash Flow Risks, Capital Structure Decisions and Cash Flow Shortfalls

Q: How can I download an article?

To download an article from SID, first log in to the site, search for the article title, and click on the 'Download Article' option.

Q: How can I download an ISI article?

To download an ISI article on SID, enter the keyword or article title in the search bar, view the relevant results, click on the desired article, and select the 'Download Article' option.

Q: How can I access the SID database?

To access the SID database, visit SID.ir, create an account, and log in to access scientific resources.

Q: Is downloading articles from SID free?

Some articles on SID are available for free, while others require payment. Details are specified on the article's page.

SAFIPOUR AFSHAR MOJTABA; Hosseini Nezhad Seyyed HamdiReza; Tavassoli Tabaei Seyyed Mohammad

مرکز اطلاعات علمی Scientific Information Database (SID) - Trusted Source for Research and Academic Resources

Journal Paper

Paper Information

Journal: JOURNAL OF DEVELOPMENT AND CAPITAL Year:2021 | Volume:6 | Issue:1 (10) Page(s): 183-194

Download Full-Text

Persian Verion

View:

512

Download:

Cites:

Information Journal Paper

Title

Cash Flow Risks, Capital Structure Decisions and Cash Flow Shortfalls

Author(s)

SAFIPOUR AFSHAR MOJTABA | Hosseini Nezhad Seyyed HamdiReza | Tavassoli Tabaei Seyyed Mohammad | Issue Writer Certificate

Keywords

FinancingQ1

Cash Flow RiskQ1

Capital StructureQ2

Cash Flow ShortfallsQ1

Abstract

Objective: Firstly, this research investigates the relationship between cash volatility and Financing decisions and then, investigates the effect of Cash Flow Shortfalls on the relationship between Financing through debt and cash flow volatility. So, based on theoretical background and pervious researches two hypotheses were developed. Based on first hypothesis, a positive relationship is expected between Cash Flow Risks and debt level in Capital Structure of firms. Those firms facing with increased risk of cash flows, may need extra cash for the Financing of their operations or they may face with a shortage of cash which in this case they will look for ways of Financing through issuing debt. Also, it is expected that a shortage in operating cash flows affects the relationship between Cash Flow Risk and Capital Structure. In another words, the relationship between debt in Capital Structure and Cash Flow Risks is stronger for those firms with a shortage in operating cash flows. Methods: This is an applied research and we have used the regression to run the research models. The Research sample consists of 178 firms (1068 firm-years) listed on the Tehran Stock Exchange (TSE) during 2014 and 2019. Research sample is excluded from financial firms, banks, insurance firms or firms with missing data. All data have been winsorized at the one percent and 99 percent levels. Results: As expected, the results show that there is a positive and significant relationship between cash flow volatility and Capital Structure (use of debt). So, it can be said that those firms facing a higher risk of cash flows, issue more debt. In addition, the results show that the relationship between Cash Flow Risk and the use of debt in Capital Structure is tenser for firms with low operational cash flows. For those firms with high operating cash flow this relationship does not exist. Conclusion: increased risk of cash flows results in the need for Financing of activities through cash flow or creates a loss or shortage of cash flows by firms. Thereby, firms look for the way to finance through issuing debts. Thereby, it is advisable for lenders and also for investor and analyst to pay especial attention to cash flow variances and risk when analyzing cash flow statements, operating cash flows and the financial statements of companies. Also, auditors should consider these risk when assessing the continuity principle for issuing an audit report. Future researches can identify other factor affecting the relationship between Cash Flow Risk and issuing debt. Also, the effects of Financing level limitation on the relationship between Cash Flow Risk and Capital Structure can be investigated in future papers.

Cites

No record.

References

No record.

Cite

APA: Copy

SAFIPOUR AFSHAR, MOJTABA, Hosseini Nezhad, Seyyed HamdiReza, & Tavassoli Tabaei, Seyyed Mohammad. (2021). Cash Flow Risks, Capital Structure Decisions and Cash Flow Shortfalls. JOURNAL OF DEVELOPMENT AND CAPITAL, 6(1 (10) ), 183-194. SID. https://sid.ir/paper/416032/en

Vancouver: Copy

SAFIPOUR AFSHAR MOJTABA, Hosseini Nezhad Seyyed HamdiReza, Tavassoli Tabaei Seyyed Mohammad. Cash Flow Risks, Capital Structure Decisions and Cash Flow Shortfalls. JOURNAL OF DEVELOPMENT AND CAPITAL[Internet]. 2021;6(1 (10) ):183-194. Available from: https://sid.ir/paper/416032/en

IEEE: Copy

MOJTABA SAFIPOUR AFSHAR, Seyyed HamdiReza Hosseini Nezhad, and Seyyed Mohammad Tavassoli Tabaei, “Cash Flow Risks, Capital Structure Decisions and Cash Flow Shortfalls,” JOURNAL OF DEVELOPMENT AND CAPITAL, vol. 6, no. 1 (10) , pp. 183–194, 2021, [Online]. Available: https://sid.ir/paper/416032/en

Related Journal Papers

No record.

Related Seminar Papers

No record.

Related Plans

No record.

Recommended Workshops