The relationship between fixed asset investments and cash flows of the firms listed in the Philippine Stock Exchange index (PSEi) excluding financial firms from years 2005-2009
Through the fast-paced evolution of technology and globalization, new innovative ideas are becoming available to the market. Of course, financial market imperfections are of existence. Agency costs and asymmetric information are some of the examples. Both of these can probably lead to overinvestment...
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| Main Authors: | , , , |
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| Format: | text |
| Language: | English |
| Published: |
Animo Repository
2008
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| Subjects: | |
| Online Access: | https://animorepository.dlsu.edu.ph/etd_bachelors/18472 |
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| Institution: | De La Salle University |
| Language: | English |
| Summary: | Through the fast-paced evolution of technology and globalization, new innovative ideas are becoming available to the market. Of course, financial market imperfections are of existence. Agency costs and asymmetric information are some of the examples. Both of these can probably lead to overinvestment, hence, investment inefficiency.
The proponents eliminated information asymmetry through firm size leaving the effect only of agency problem. The study found that the overinvestment reduction tools: dividends, leverage, and debt maturity are effective for alleviating the dependence of investments on cash flows. It also found that the overinvestment is alleviated in both the alignment and entrenchment effect level. |
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