Conclusions

Rahul Dhumale

Chapter 7 in Excess Cash Flow, 2003, pp 182-190 from Palgrave Macmillan

Abstract: Abstract The positive relationship between excess cash flow and investment is well known, but the decision environment which determines cash flow theory remains unresolved. This study tried to fill this gap by considering if decisions to use internal finance stem from the managerial/principal agent (MPAA) or the more commonly accepted asymmetric information (AIA) considerations. Evidence here supports the agency model of MPAA behaviour rather than information asymmetry which assumes perfect capital markets. This study is a fundamental departure from the evidence in the literature which rarely distinguishes between the MPAA and AIA.

Keywords: Stock Market; Corporate Governance; Capital Market; Asymmetric Information; Agency Cost (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-50951-1_7

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DOI: 10.1057/9780230509511_7

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