The Cash Flow Model with Float: A New Approach to Deal with Valuation and Agency Problems

Rodolfo Apreda ()

Journal of Applied Economics, 1999, vol. II, pages 247-279

Abstract: In this paper we introduce a cash flow model with float to manage core issues in Corporate Finance. The float actually removes current hindrances pervading the standard cash flow model. To start with, we derive the float model and uncover its underlying financial engineering. After that, any investment decision is regarded as a synthetic portfolio made out of a revenue bond financing the investment, and a performance swap acting as a value driver. It is within the performance swap where the float lies and enhances value. Furthermore, extension to valuation is provided taking advantage of the former portfolio approach. Next, the float complex structure is displayed to proceed towards its sources and uses of cash flows. Last of all, we expand upon a normative model which makes the most of the float and spells out how an accountability precept should be functional in redressing agency problems.

Keywords: Cash Flow Float; Agency Problems; Arbitrage; Performance Swap; Revenue Bond (search for similar items in EconPapers)
JEL-codes: G30 G34 G32 (search for similar items in EconPapers)
Date: 1999
View list of references View citations in EconPapers

Downloads: (external link)
http://www.cema.edu.ar/publicaciones/download/volume2/apreda.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cem:jaecon:v:2:y:1999:n:2:p:247-279

Access Statistics for this article

Journal of Applied Economics is edited by Germán Coloma and Mariana Conte Grand and Jorge M. Streb

More articles in Journal of Applied Economics from Universidad del CEMA
Contact information at EDIRC.
Series data maintained by Valeria Dowding ().