MODELLING THE INFLUENCE OF CASH FLOW ON INDEBTEDNESS OF CROATIAN COMPANIES USING LINEAR REGRESSION MODEL

Anita Ceh Casni () and Josipa Filic ()
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Anita Ceh Casni: Faculty of Economics and Business, Zagreb
Josipa Filic: Faculty of Economics and Business, Zagreb

Economic Thought and Practice, 2019, vol. 28, issue 2, 485-498

Abstract: The aim of this paper is to examine the statistical relationship between cash flow and corporate debt using multiple linear regression model. In addition to cash flow, the size of the enterprise was used as an additional explanatory variable in the model. Since there is a great deal of research in the relevant literature on the relationship between profit and debt, this paper uses cash flow instead of profit, which is a contribution to the existing literature. The results of the regression analysis indicate a negative impact of cash flow on indebtedness, which also confirms packing order theory. In addition, the results show a positive (albeit weaker) impact of corporate size on debt.

Keywords: multiple linear regression model; cash flow; indebtedness; firm size (search for similar items in EconPapers)
JEL-codes: C30 G30 G32 L25 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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