Financial Reporting Quality, Free Cash Flow, and Investment Efficiency

Wang, Fusheng; Zhu, Zhibiao; Hoffmire, John

doi:10.1051/shsconf/20151701027

Cited by 17 publications

(20 citation statements)

References 22 publications

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“…Sehingga pemberi pinjaman melakukan antisipasi terhadap kemungkinan manajemen dan pemegang saham melakukan tindakan oportunistik yang dapat mengakibatkan meningkatnya bunga pinjaman atau pembatasan kredit, sehingga penerimaan pinjaman dari debtholders menjadi lebih berisiko bagi perusahaan dan memaksa manajemen untuk menggunakan sumberdaya keuangan perusahaan secara hati-hati. Sehingga menimbulkan ketidakpercayaan pemegang saham dan memunculkan JRAK 9.3 ketidakharmonisan hubungan antara manajemen dengan debtholders (Borad, 2019;Du, Li, Lin, dan Wang, 2018;McNichols dan Stubben, 2008;Wang, Zhu, dan Hoffmire, 2015).…”

Section: Pendahuluanunclassified

“…Hal ini terjadi karena nilai besaran (magnitude) earning management kecil atau relatif tidak terjadi aksi earning management. Bukti ini mendukung hasil penelitianWang et al (2015) yang juga berhasil membuktikan bahwa variabel free cash flow dan earning management memiliki pengaruh interaktif terhadap efisiensi investasi, dan bukti ini sekaligus melengkapi hasil penelitian yang pernah dilakukan olehCardoso et al (2014).…”

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Investigasi Empiris Interaksi Free Cash Flow, Earning Management Dan Inefisiensi Investasi

Perdana¹

2019

JRAK

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The level of Free cash flow has a pivotal role for investors to understand the inefficiency of a company's investment. This paper discusses empirical research that investigates the main effects of free cash flow and the effects of their interactions with earning management on investment inefficiency. This study uses a sample of 56 infrastructure, utility and transportation companies registered in Indonesian's Capital Market for the fiscal year ended on December 31, 2014 to 2018. This study uses a multiple regression method with the pooled ordinary least square (OLS) approach for 256 observational data. This study find that the main effect of free cash flow is significantly positive on investment inefficiency, but the earning management does not affect inefficiency investment. Furthermore this study find that the interaction effect of free cash flow is significantly negative on investment inefficiency if the amount of earning management is small.

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Section: Pendahuluanunclassified

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Investigasi Empiris Interaksi Free Cash Flow, Earning Management Dan Inefisiensi Investasi

Perdana¹

2019

JRAK

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“…This could be attributed to management being satisfied with their internal cash and their flexibility to generate funds easily given the firm's ability to generate funds more easily given the firm's low levels of leverage which enables them to ignore improving the quality of their financial reports to help in more efficiently allocating the firm's capital. Even though the studies performed in emerging markets that studied the interactive effect between financial constraints and the quality of financial reporting used the magnitude of investments as an indicator of the efficiency of investments without and they did not depend on the residuals of their regression model as indicators of investment's inefficiency (Lara et al 2009, Wang et al 2015…”

Section: Predictors: Financial Reporting Quality Financial Reportingmentioning

confidence: 99%

جودة التقاریر المالیة کمحدد للعلاقة بین القیود المالیة وکفاءة الاستثمارات-دراسة تجریبیة علی الشرکات غیر المالیة المقیدة فی سوق الأوراق المالیة المصری (باللغة الإنجلیزیة)

رمضان¹

2017

مجلة الاسکندریة للبحوث المحاسبیة

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This paper is based on the perspective of firm's agency conflicts to examine the relationship between financial constraints on one hand measured by a composite score that encompasses the firm's cash balance scaled by total assets and the firm's negative capital structure and investment efficiency on the other. To reduce measurement errors, financial reporting quality which serves as the moderating factor in this relationship is measured by several proxies as there is no single well defined measure for this variable. A sample of 234 nonfinancial firms listed in the Egyptian stock market during the period 2013-2016 is used to test the empirical models through regression analysis. Results agreed with previous studies regarding the effect of financial reporting quality on investment efficiency and study was able to provide empirical evidence regarding the positive effect of financial reporting quality on the efficiency of investment. However, with respect to the effect of financial constraints and the interactive effect of financial constraints and financial reporting quality on the efficiency of investments, results ran counter to the researcher's predictions as a significant negative effect was found between these two variables and the dependent variable which is the efficiency of investment which raises several questions concerning earnings management practices by management of firms listed in Egyptian stock Exchange showing no concern with financial reporting quality. Such a relationship appeared to be more obvious for overinvesting firms compared to their underinvesting counterparts even though the number of underinvesting firms in the sample was much more greater than their overinvesting counterparts which emphasizes these results and shows that as long as management finds the internal funds available, they are not concerned with improving the quality of their financial reports. This paper extends the accounting literature concerning financial reporting quality and investment efficiency to the emerging capital markets in the world. Moreover, this is the first study that examines the interaction effect between financial reporting quality and financial constraints, taking financial constraints as an independent variable on listed companies in Egypt.

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“…Company that has cash or free cash flow tends to do excess investment, even when the company has low opportunity for investment (Opler et al, 1999;Richardson, 2006;Wang et al, 2015;Lewellen & Lewellen, 2016). Other researcher also finds that company that has a big amount of cash tend to do acquisition, followed by the decrease of operational performance (Harford, 1999;Chen et al, 2016).…”

Section: Introductionmentioning

confidence: 98%

The Effect of Optimal Cash and Deviation from Target Cash on the Firm Value: Empirical Study in Indonesian Firms

Hanafi²,

Lantara³

2019

JDM

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The aim of this paper is to examine the effect of cash, optimal cash holding, deviation from target cash (the target adjustment model) on the firm value. This research uses a sample of Indonesian publicly traded firms for the period 2001-2017 (3,349 observation). This paper uses a dynamic panel fixed effects model to estimate optimal cash holdings. Hypothesis testing uses GLS fixed effect and interaction effect uses regression moderated analysis. Research finds that: first, cash, optimal cash, and deviation from target cash have an effect on the firm value. Second, corporate governance moderates the effect of cash, optimal cash, and deviation from target cash on the firm value. Third, investment positively moderates the effect of cash on the firm value. Investment negatively moderates the effect of optimal cash, deviation from target cash on the firm value. Debt negatively moderates the effect of cash, optimal cash on the firm value. Debt positively moderates the effect of deviation from target cash on the firm value. AbstrakTujuan penelitian ini menguji pengaruh kas, kas optimal perusahaan, dan deviasi dari kas target (model penyesuaian ke kas target) pada nilai perusahan. Riset menggunakan sampel perusahaan yang sudah go public selama perioda 2001-2017 (3.349 observasi). Penelitian menggunakan model panel dinamis fixed effects untuk mengestimasi kas optimal. Pengujian hipotesis menggunakan regresi GLS fixed effect, dan efek interaksi menggunakan model regresi berjenjang. Temuan penelitian menunjukkan bahwa: Pertama, kas, kas optimal, deviasi dari kas target berpengaruh pada nilai perusahaan. Kedua, interaksi tata kelola perusahaan terhadap pengaruh kas, kas optimal, dan deviasi dari kas target pada nilai perusahaan menghasilkan temuan yang beragam. Ketiga, investasi memperlemah pengaruh kas pada nilai perusahaan. Investasi memperkuat pengaruh kas optimal, dan deviasi dari kas target pada nilai perusahaan. Utang memperlemah pengaruh kas, dan kas optimal pada nilai perusahaan. Utang memperkuat pengaruh deviasi dari kas target pada nilai perusahaan.

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Financial Reporting Quality, Free Cash Flow, and Investment Efficiency

Cited by 17 publications

References 22 publications

Investigasi Empiris Interaksi Free Cash Flow, Earning Management Dan Inefisiensi Investasi

Investigasi Empiris Interaksi Free Cash Flow, Earning Management Dan Inefisiensi Investasi

The Effect of Optimal Cash and Deviation from Target Cash on the Firm Value: Empirical Study in Indonesian Firms

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