The Impact of Free Cash Flow and Capital Structure on the Performance of the Company

Wang, Guo Zhen; Wang, Zi Yue; Li, Yuan Jie

doi:10.4028/www.scientific.net/amm.623.305

Cited by 3 publications

(5 citation statements)

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“…In terms of firm‐level factors, if the total assets of a firm, the equity concentration, the institutional ownership, and the percentage of executive shareholding are higher, then, the firm's performance will improve. These studies are generally consistent with the findings of previous related studies (Laitinen & Kadak, 2018; Molodchik et al., 2016; Tian & Lau, 2001; Wang et al., 2014). The higher the level of equity on the company's balance sheet, and the higher the percentage of CEO's compensation in the total annual salary of management, the poorer the company's performance will be (Fujianti, 2018).…”

Section: Resultssupporting

confidence: 92%

“…In addition, we considered organizational level factors as control variables that can account for an association between the spatiotemporal context and firm performance. These control variables include the size of the company (Laitinen & Kadak, 2018), capital structure (Wang et al., 2014), equity structure (Wu et al., 2014), corporate governance structure (Liu & Sun, 2010), and executive compensation structure (Fujianti, 2018).…”

Section: Literature Review Theory and Hypothesismentioning

confidence: 99%

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Spatiotemporal context and firm performance: The mediating effect of strategic interaction

2020

Growth and Change

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Traditional studies of firm performance typically focus on the effect of market structure and rarely consider the impact of the spatiotemporal context in industrial competition. Using a sample of 1,555 listed companies from 2015 to 2018 in China, this study shows that the profit center of gravity tends to move from southeast to northwest, and that there are negative effects on firm performance with distance from the profit center of gravity. Moreover, when controlling for organizational variables, strategic interaction at the local level significantly mediates the relationship between spatiotemporal context at the global level and firm performance at the microlevel. This investigation provides preliminary support for strategic interaction as a significant mediator between spatiotemporal context and firm performance, and further highlights the relevance of spatiotemporal context and strategic interaction in determining firm performance. The results of this study contribute to our understanding of the dynamic mechanism of spatiotemporal context affecting firm performance and the role of strategic interaction at the local level in this relationship, which can improve the existing insights into new economic geography.

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Section: Resultssupporting

confidence: 92%

Section: Literature Review Theory and Hypothesismentioning

confidence: 99%

Spatiotemporal context and firm performance: The mediating effect of strategic interaction

2020

Growth and Change

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“…Lai et al (2020) show that FCF exerts a significantly negative effect on firm performance. Wang et al (2014) show that more FCF exerts negative effects on Chinese firms' performance and increases financing liabilities.…”

Section: Cg and Fcf Effect On The Csr-financial Distress Relationshipmentioning

confidence: 96%

“…Wang et al . (2014) show that more FCF exerts negative effects on Chinese firms' performance and increases financing liabilities.…”

Section: Theoretical Framework and Hypothesesmentioning

confidence: 99%

Corporate Social Responsibility Rating, Corporate Governance, and Financial Distress: Evidence from China

Chi

Khalil

Erraja

2023

Asia-Pac J of Fin Stud

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This study investigates the relationship between corporate social responsibility (CSR) and financial distress in China using the O‐score and a Chinese sample of 4202 observations between 2011 and 2017. The relationship is accordingly more pronounced in weak corporate governance firms with low levels of institutional shareholders and free cash flow and among non‐state‐owned enterprises and mandatory CSR disclosure firms. The findings are robust to endogeneity through robustness checks and the 2013 Sichuan Lushan earthquake as an exogenous shock to CSR. Ultimately, the study will help investors, shareholders, and policymakers appreciate the impact of CSR dimensions.

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“…Basil (2011) shows that dividend payout ratio is positively correlated with profitability while the relationship between debt levels and profitability is negative. Wang et al, (2014) combine the free cash flow and leverage to explain the changes in profitability of a firm in China. The conclude that when the firms are more leveraged, the profitability ratios fall.…”

Section: Introductionmentioning

confidence: 99%

Impacts of Capital Structure and Dividend Policy on the Financial Performance of Listed Companies on Vietnamese Stocks Market

Vu¹,

Vu²,

Nguyen³

2021

jeb

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This study is taken to describe the relationship between the levels of debt, dividend policy and the performance of firms listed in Vietnamese stock market. The dividend policy is proxied by the dividend yield while firm’s performance is measured by ROE, ROA, and P/E. The total number of observations is 552, collecting from 92 listed companies on Hochiminh Stock Exchange during 2012 and 2019. The analysis results from generalized least squares (GLS) models report that the choice of firm’s performance proxy affects the relationship between firm’s performance and leverage as well as dividend policy. While leverage has positive impact on ROE and ROA, it has negative impact on P/E. In contrast, dividend yield ratio is negatively correlated with ROA and P/E but positively correlated with ROE. However, the impact of debt levels on firm’s performance is independent with the choice of leverage proxy. The findings of this research are expected to provide better understanding about the connection between debt, dividend and performance of the firm that can support the managers to make relevant decisions.

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The Impact of Free Cash Flow and Capital Structure on the Performance of the Company

Cited by 3 publications

References 1 publication

Spatiotemporal context and firm performance: The mediating effect of strategic interaction

Spatiotemporal context and firm performance: The mediating effect of strategic interaction

Corporate Social Responsibility Rating, Corporate Governance, and Financial Distress: Evidence from China

Impacts of Capital Structure and Dividend Policy on the Financial Performance of Listed Companies on Vietnamese Stocks Market

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