 The Cash Flow Model with Float: A New Approach to Deal with Valuation and Agency ProblemsJournal of Applied Economics, 1999, vol. 2, 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) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://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 currently 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. |
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