Investigating the relationship between the investment sensitivity of cash flows and the levels of capital expenditures in companies admitted to Tehran Bahadur Stock Exchange.

Number of pages: 177 File Format: word File Code: 29776
Year: Not Specified University Degree: Master's degree Category: Librarianship
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  • Summary of Investigating the relationship between the investment sensitivity of cash flows and the levels of capital expenditures in companies admitted to Tehran Bahadur Stock Exchange.

    Thesis for Master of Accounting (MA)

    Abstract

    The purpose of this article is to investigate the relationship between investment sensitivity and cash flows with the level of capital expenditures. In this research, the financial information of 73 companies admitted to the Tehran Stock Exchange during the period from 1382 to 1391 has been examined (730 years - companies). 18SPSS software was used to analyze the results. Also, EXCEL software was used to calculate the required data. Over-invested and under-invested companies were separated using the average investment criteria in each year and it was shown that the sensitivity of investment-cash flows has a direct relationship with the amount of capital expenditures. Such a direct relationship between market value and book value of equity with long-term investment expenses was seen. Using multiple criteria (dividend ratio, company size and KZ index) as a representative of financial constraints, it was shown that the sensitivity of investment-cash flow to company size and dividend ratio has a direct relationship and the KZ index has an inverse relationship.

    Key words: sensitivity of investment-cash flows, KZ index, market value to book value of equity, financial constraints

    Introduction

    Information Cash flow history can help users of financial statements in judging the amount, time and certainty of future cash flows. The mentioned information shows the relationship between the profitability of the business unit and its ability to generate cash, and as a result, determines the quality of the profit earned by the business unit. In addition, analysts and other users of financial information often formally or informally use models to evaluate and compare the present value of future cash flows of business entities. Historical information related to the flow of cash can be useful to control the accuracy of past assessments and show the relationship between the business unit's activities and its receipts and payments. In the evaluation models of business units, cash is used as a direct data and therefore its historical flows can be used (Hosseinpour, 2014).

    In the definition of investment, it can be said that investment is a type of asset that the investing unit keeps to increase economic benefits. Investments may be made in various forms and held for various reasons. The main reason for studying investment is that investment fluctuations help to understand the business cycle. Another reason is that the level of investment spending can be significantly affected by financial policies. In the capital market, there is always a great desire to evaluate investment performance, because the evaluation of the performance of investment companies as the evaluation of the performance of investment specialists is one of the topics discussed in the field of investment (Kashanipour et al., 2019). The present research is designed to investigate the relationship between the sensitivity of cash flow investment and the level and timing of investment expenditures and will be presented in 5 chapters. In perfect capital markets, it is expected that all companies have easy access to external sources for financing, and investment decisions are solely based on expected future profitability, and access to domestic capital has no effect on decisions. But in the real world, according to the mechanism of asymmetric information, the cost of financing using internal and external sources is different, and in these environments, asymmetric information between the lender and the borrower affects the company's ability to obtain credit and therefore their investment power and economic activity (Moradi and Ahmadi, 2013).

    Historical information related to cash flow can help users of financial statements in judging the amount, time, and certainty of realizing future cash flows. The mentioned information shows the relationship between the profitability of the business unit and its ability to generate cash, and as a result, determines the quality of the profit earned by the business unit. In addition, analysts and other users of financial information often formally or informally use models to evaluate and compare the present value of future cash flows of business entities.In addition, analysts and other users of financial information often formally or informally use models to evaluate and compare the present value of future cash flows of business entities. Historical information related to the flow of cash can be useful to control the accuracy of past assessments and show the relationship between the business unit's activities and its receipts and payments. The information reflected in the cash flow of the current year alone is not enough to evaluate the future cash flows because some transactions may have been carried out using the cash flows of previous years and also some transactions may have occurred in previous financial periods and sometimes it is expected to lead to other cash flows in one of the future periods. In the evaluation models of business units, cash is used as a direct data and therefore its historical flows can be used (Hosseinpour, 2014) according to the contents. Above, the main problem of the current research is whether the investment sensitivity of cash flows is related to the levels and timing of capital expenditures?

    1-3-Importance and necessity of the research

    What has caused the importance of the relationship between investment and cash flows, according to some, is the financial limitations that companies face. Investigating the impact of financial constraints and the factors that cause this financial constraint on the sensitivity of cash flow investment has been the subject of discussion in recent years, because it is expected that companies that have financial constraints face a greater cost difference between domestic and foreign capital. And as a result, they should rely more on internal cash flow for investment.

    Given that the topic of cash and cash flows is one of the important topics in accounting and financial reporting, and sufficient access to cash guarantees the survival of the company and ensures the continuity of the company's life, therefore, examining the topic of cash flows provides useful information in financial evaluations and can be useful in managers' decisions to make profitable investments. Considering the above and the necessity of investment for the continuation of the company's life, research on the relationship between investment and cash flows seems necessary. In this regard, examining the factors affecting the intensity of this relationship and the sensitivity of investment to the level of investment expenses can be useful in drawing conclusions. Therefore, considering the importance of this issue, we decided to research this sensitivity and be able to draw bases to identify the relationship between investment changes and the level of investment expenditures. Most of the results of the previous studies are based on the differences in cash flow sensitivity, which are based on the predicted criteria of financial constraints, such as the payment of dividends and the estimated size. But with a critical attitude, such results depend on the selection and definition of the criteria of financial restrictions. For example, Kaplan and Zinglas [1] (1997) and Cleary [2] (1999) found higher levels of cash flow sensitivity using an alternative classification approach for companies with a very weak probability of being financially constrained. We will examine the cash flows by considering the Kaplan Zinglasmord index.

    1-5- Research questions

    First question: Is there a significant difference between investment sensitivity - cash flows in over-invested companies and under-invested companies? Is there a significant correlation?

    The third question: Is the sensitivity of investment - cash flows in companies facing financial restrictions more than companies without financial restrictions?

    1-6-Research Hypotheses

    First hypothesis: There is a significant difference between investment sensitivity - cash flows in overinvested companies and underinvested companies.

    Second hypothesis: between the ratio of market value to the book value of equity with the amount There is a significant correlation between long-term (capital) investment expenses.

    The third hypothesis: investment sensitivity - cash flows in companies facing financial constraints are more than companies without financial constraints.

  • Contents & References of Investigating the relationship between the investment sensitivity of cash flows and the levels of capital expenditures in companies admitted to Tehran Bahadur Stock Exchange.

    List:

    List

    Page Title

    Abstract ..1

    1- Generalities of the research ..2

    1-1 Introduction ..3

    1-2 statement of the problem ..4

    1-3 importance and research necessity. 5

    1-4 specific research objectives .. 6

    1-5 research questions .. 7

    1-6 research assumptions .. 7

    1-7 definition of words and terms. 8

    1-8 collection method.. 10

    1-9 statistical population and sampling method. 10

    10-10 research structure .. 10

    1-11 summary of the first chapter .. 11

    2- Theoretical foundations and overview of the research background. 12

    1-2 Introduction .. 13

    2-2 Investment .. 13

    2-2-1 Investment models. 15

    2-2-1-1 investment accelerator model. 16

    2-2-1-2 flexible accelerator theory of investment. 19

    2-2-1-3 neo-classical investment model. 19

    2-2-1-3-1 Jorgensen model. 20

    2-1-1-3-2 Kitobin investment model. 23

    2-2-1-4 investment model in the presence of asymmetric information. 28

    2-2-2 types of investment decisions. 30

    2-2-2-1 Development decisions. 31

    2-2-2-2 Replacement or selection decisions. 32

    2-2-2-3 Buying or renting decisions. 33

    2-1-3 investment decision process. 34

    2-1-3-1 Search for a new project. 34

    2-2-3-2 Gathering information about the project. 35

    2-2-3-3 project evaluation .. 36

    2-2-3-4 project selection .. 37

    2-3 financing .. 37

    2-3-1 financing methods. 38

    2-3-1-1 Debt .. 39

    2-3-1-2 Issuance of ordinary shares. 41

    2-3-1-3 Publication of premium shares. 44

    2-3-1-4 accumulated profit.. 45

    2-3-2 financing model.. 46

    2-3-3 financing hierarchy model. 49

    2-4 Financing and investment. 55

    2-4-1 Internal resources and investment. 55

    2-4-2 Internal resources and investment models. 60

    2-4-3 Financial restrictions and cash flow investment. 65

    2-5 previous studies .. 68

    2-5-1 internal studies .. 68

    2-5-1-1 focused studies and investment and cash flows. 68

    2-5-1-2 focused studies and financial limitations and sensitivities of cash flows - investment. 72

    2-5-2 Foreign studies .. 75

    2-5-2-1 Foreign studies focused on financial limitations. 75

    2-5-2-2 foreign studies focused on the basis of creating financial restrictions. 82

    2-5-2-3 Foreign studies with conflicting findings of primary studies. 83

    2-6 Chapter summary .. 86

    3- Research method .. 87

    3-1 Introduction .. 88

    3-2 Statement of the problem and development of research hypotheses 89

    3-2-1 Relationship between investment sensitivity - cash flows with the level and timing of investment expenses. 89

    3-2-2 The first hypothesis .. 90

    3-2-3 The second hypothesis .. 90

    3-2-4 The third hypothesis .. 90

    3-3 statistical tests .. 90

    3-3-1 tests related to the basic assumptions of the regression model. 91

    3-3-1-1 Basic assumptions of regression. 91

    3-3-1-2 Testing the basic assumptions of regression. 93

    3-3-2 tests related to variable relationships. 94

    3-3-2-1 Significance test of the independent variable coefficient. 94

    3-3-2-2 coefficient of determination .. 94

    3-4 research variables .. 95

    3-4-1 How to calculate research variables. 95

    3-4-1-1 The model used to understand the relationship between cash flows and investment. 95

    3-5 How to test hypotheses. . 98

    3-5-1 How to test the first hypothesis. 98

    3-5-2 How to test the second hypothesis. 99

    3-5-3 How to test the third hypothesis. 99

    3-6 Statistical population, statistical sample, sampling method and time domain. 100

    3-7 information gathering methods. 101

    3-8 chapter summary.. 102

    4- Data analysis. 103

    4-1 Introduction .. 104

    4-2 Examining the normal distribution of the dependent variable. 107

    4-3 linearity of the relationship of distribution charts. 107

    4-4 multiple regression model. 108

    4-5 Review of the model in general. 109

    4-6 test of the first hypothesis.. 113

    4-6-1 estimation of the model by separating low investors and high investors. 113

    4-6-2 Estimation of the model by more or less dividing the investor into two groups113

    4-6-2 Model estimation by more or less dividing the investor into two groups of zero and one. 114

    4-6-3 Review of the model in general for the cash flows of the previous year. 116

    4-7 second hypothesis test. 118

    4-8 The test of the third hypothesis. 119

    4-8-1 Examining the model with and without restrictions based on size. 119

    4-8-2 Examining the model with and without restrictions based on dividends. 122

    4-8-3 Examining the model with and without restrictions based on KZ index. 125

    4-8-4 Examining the correlation coefficient between variables. 127

    4-8-5 Comparing the value of correlation coefficients. 128

    4-9 Checking the validity of the model. 130

    4-10 Summary of the results of the hypotheses. 131

    4-11 Summary of the fourth chapter. 132

    5- Conclusion and suggestions. 134

    5-1 Introduction. 135

    5-2 The results of the hypothesis test. 136

    3-5 discussion about the results. 144

    5-4 suggestions based on research results. 146

    List of sources and sources. 147

    Persian sources. 147

    Latin sources. 150

    Latin abstract. 154

     

    Source:

     

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Investigating the relationship between the investment sensitivity of cash flows and the levels of capital expenditures in companies admitted to Tehran Bahadur Stock Exchange.