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Based on Jensen (1986), we assume that a company’s performance decreases with higher free-cash-flow because of the agency costs of managerial discretion. In a dynamic continuous-time framework, ...
All diversified firms are not created equal. Size matters when it comes to the functioning of corporate internal capital markets and the value of corporate diversification. The “diversification ...
It has long been known that firms prefer internal to external finance for funding their investments. William Baumol (1965, p.74) clearly articulated what would be called a "financing hierarchy" by ...
This study undertakes firm-level analysis of investment opportunities and free cash flow in an attempt to explain the source of the wealth effect of financial liberalization for 14 emerging countries ...
This paper analyses the issue of the timing of expenditures in replacing fixed assets within the context of valuing firms using the free cash flow approach. Standard practice amongst both ...
A classic theory of corporate governance holds that, when cash flow is high and investment opportunities scarce, takeover threats reduce managerial self dealing and encourage dividend payment to ...
I select a sample of firms that provides a powerful setting to study how contracts adapt to a change in the firm’s environment. I focus on firms experiencing a large and persistent increase in ...
We examine the market reaction to announcements of actual share repurchases, events that cluster both within and across firms. Using a multivariate regression model, we find that the market reacts
In a M & M world, the equity value is the present value of the Free Cash Flow FCF at the Weighted Average Cost of Capital WACC minus debt and it should be identical to the present value of the ...
The dividend discount model is based upon the premise that the only cashflows received by stockholders is dividends. Even if we use the modified version of the model and treat stock buybacks as ...



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