Performance appraisal is a process which help shareholders make informed and optimal investment decisions. In recent decades, a long stream of research has devoted particular attention to the importance and impact of financial decisions on firm performance and firm value. The present study thus is primarily concerned with investigating the association between free cash flow and institutional ow...

a r t i c l e i n f o In this study, the advanced panel threshold regression model was used to test whether a marginal threshold value representing optimal financial decisions exists respective to the holding ratio of free cash flow, the debt ratio, and the dividend payout ratio determined by the U.S. life and property–casualty insurance industry. The results indicated that an optimal financial...

Prediction of stock returns has always been one of the most important issues in finance. Investors have attracted to use of Fama-French Five-Factor Model (FFFFM) as one of the powerful methods for pricing financial assets and predicting the stock returns. This research investigates the predictability of stock returns by including some important firms features namely cash holdings, dividend rate...

Richardson’s paper is a useful addition to the literature on the relationship between cash flow and investment. His approach to estimating this relationship is a new twist on earlier approaches. Like most of this literature, Richardson finds evidence that firms’ investment decisions are excessively sensitive to current cash flow, suggesting that violations of the Modigliani–Miller assumptions a...

Shareholders have imperfect control over the decisions of the management of a firm. We integrate a widely accepted version of the separation of owership and control — Jensen’s (1986) free cash flow theory — into a dynamic equilibrium model and study the effect of imperfect corporate control on asset prices and investment. We assume that firms are run by empire-building managers who prefer to in...