This paper examines empirically the effect of firm growth opportunities and earnings quality on the market valuation of free cash flow, defined as the difference between operating cash flows and capital expenditures. Equity valuation theory prescribes that free cash flow should not be associated with stock returns because it does not add value. However, free cash flow could become a value-relev...

This study examines the rounding phenomenon in operating cash flows for firms listed three major U.S. stock exchanges (i.e., New York Stock Exchange, NASDAQ, and American Exchange) Over-the-Counter (OTC) market. It finds that round￾up earnings, but they do not round-up flows; while OTC market both earnings flows. Overall, results from this provide consistent evidence have incentives to round up...

A resource investment problem is a project-scheduling problem in which the availability levels of the resources are considered decision variables and the goal is to find a schedule and resource requirement levels such that some objective function optimizes. In this paper, we consider a resource investment problem in which the goal is to maximize the net present value of the project cash flows. ...

We study how securities and issuance mechanisms can be designed to mitigate the adverse impact of market imperfections on liquidity. In our model, asset owners seek to obtain liquidity by selling claims contingent on privately observed future cash-flows. Liquidity suppliers can be competitive or strategic. In the optimal trading mechanism associated to an arbitrary given security, issuers with ...

A resource investment problem is a project-scheduling problem in which the availability levels of the resources are considered as decision variables and the goal is to find a schedule, and resource requirement levels, such that some objective function optimizes. In this paper, we consider a resource investment problem in which the goal is to maximize the net present value of the project cash fl...

The intensity of competition in business markets is to the extent that even the slightest strategic mistakes will lead to the failure of the organizations. The lack of knowledge and implementation of appropriate competitive strategies in such markets and, on the other hand, the failure to review the effects of these strategies on the types of cash flows in diverse capital structures is no also ...

A fundamental property of accrual accounting is to smooth temporary timing fluctuations in operating cash flows, indicating an inherent negative correlation between accruals and cash flows. We show that the overall correlation between accruals and cash flows has dramatically declined in magnitude over the past half century and has largely disappeared in more recent years. The adjusted R 2 from ...