Aggressive, Conservative and Moderate Policy in Working Capital Management and Firm's Free Cash Flow Yield (FCFP) Evidence from Tehran Stock Exchange
Journal Title: International Journal of Empirical Finance - Year 2014, Vol 2, Issue 3
Abstract
This paper investigates the impact of Working Capital Management (WCM) policy on returns of the listed firms on Tehran Stock Exchange (TSE) in the period 2007-2011. To this effect, 57 companies were initially selected of which 8 companies, after closer examination, for lacking specific WCM policy were excluded from the sample, and the remaining 49 companies were actually subjected to further analysis. With a cash flow approach, free cash flow yield or FCF to price per share (FCF/P) was applied to measurement of firm's return. The results suggested that majority of the companies followed a conservative WCM policy (CP), and quite remarkably, CP was the only policy which showed a significant, but negative, association with free cash flow yield (FCFP). The two other policies, i.e. aggressive policy (AP) and moderate policy (MP), had no significant effect on FCF/P.
Authors and Affiliations
Meysam Kaviani, Reza Shahmanosuri, Maryam Batebi, Seyed Reza Seyednezhad Fahim
Keywords
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- EP ID EP27146
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