An investigation on the effect of the corporation governance structure and free cash flow on over- investment

Taghavi, M.; Valahzaghard, M.; Amirjahadi, N.

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Management Science Letters

ISSN 1923-9343 (Online) - ISSN 1923-9335 (Print) Quarterly Publication Volume 4 Issue 3 pp. 567-572 , 2014

An investigation on the effect of the corporation governance structure and free cash flow on over- investment Pages 567-572 Download PDF

Authors: Mehdi Taghavi, Mohammad Khodaei Valahzaghard, Neda Amirjahadi

Keywords: Corporate Governance, Free Cash Flow, Over Investment

Abstract: This study examines the impact of corporate governance structure and free cash flow on over-investment on 121 firms listed in Tehran Stock Exchange over the period 2008-2011. To measure over-investment, free cash flow and corporate governance variables based on available information reported on financial statements are gathered and using cross section regression method, different hypotheses of the survey are examined. The results indicate that among corporate governance mechanisms investigated in survey, there is a significant relationship between percentage of non-executive directors and ownership concentration with over-investment. However, there was no meaningful relationship among controlling shareholders and duality with over-investment. Furthermore, a significant relationship between free cash flow and over-investment has been found.

How to cite this paper

 Taghavi, M., Valahzaghard, M & Amirjahadi, N. (2014). An investigation on the effect of the corporation governance structure and free cash flow on over- investment.Management Science Letters , 4(3), 567-572.

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