• Journal of Distribution Science
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• v.14 no.12
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• pp.129-139
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• 2016

Purpose - This paper examines the explanatory power of the agency theory in the determination of cash holdings for Korean retail firms. If the agency theory holds, a firm with strong corporate governance structure tends to have low cash holdings. A strong governance structure makes the CEO of this firm to behave in the interests of shareholders and thus the CEO has low incentive to stockpile cash holdings, which can be easily diverted for the CEO's own managerial purposes. We investigate this relationship between corporate governance structure and cash holdings, by using corporate governance scores as a proxy variable that captures the effectiveness of corporate governance mechanism. Research design, data, and methodology - We adopt the sample of publicly listed retail firms in KOSPI market from 2005 to 2013. Financial and accounting statements are gathered from the WISEfn database. We also use the corporate governance scores published by Korean Corporate Governance Service. The relationship between the corporate governance scores and cash holdings is cross-sectionally estimated based on the ordinary least square method. This estimation method is widely accepted in the existing literature. The sample of large conglomerates, Chebol, and the remainder firms are separately examined as well, to account for the distinctive internal financing environment in these large conglomerates. Results - We mainly contribute to the extant literature by providing empirical evidence against the agency theory of cash policy. Unlike the prediction of agency theory, we confirm statistically insignificant or even positive correlations between the set of corporate governance scores and cash-asset ratios. Almost all the major corporate governance attributes including total score, shareholder rights, board structure, and the quality of information disclosure do not show negative correlations with cash holdings, which poses a strong challenge to the validity of the agency theory in the determination of retail firms' cash holdings. Conclusions - This study presents interesting empirical results with respect to the cash policy in Korean retail firms. Consistent to prior studies, I verify that the agency theory only limitedly explains the level of cash holdings. Future studies may obtain more robust results by examining a longer sample period.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.6
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• pp.85-93
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• 2020

The paper investigates the impact of the statement of cash flows of listed companies on lending decisions of commercial banks in the context of Vietnam. Survey data for the research were collected from 160 credit officers of Vietnamese commercial banks for short-term and long-term lending decisions, whether the cash flow statement includes complete information or has a lack of information. The cash flow statement, in which the information on the cash flow is completely contrary to the profit information on the income statement is examined. This paper employed T-tests to address the research issues in a market considered to be ineffective, like Vietnam. The research results show: (1) the information on the cash flow statement affects both the short-term and long-term lending decisions of credit officers, and (2) the lack of information on the cash flow statement in both cases of positive and negative profits affects the comfort and confidence of credit officers in making decisions. The research findings also indicate that cash flow statements are important for lending decisions of credit institutions in Vietnam. Therefore, this paper provides a new insight to managers on how to improve the quality of cash flow statement to meet the needs of lenders.

• The Korean Journal of Health Service Management
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• v.11 no.1
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• pp.1-9
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• 2017

Objectives : Cash Flows from operating activities is the most important part of the cash flow statement and it serves as an important financing source. Accordingly, the purpose of this study is to examine the influence of the contents of cash flows from operating activities on the changes in borrowings. Methods : In this study financial data from 2011 to 2014 were used to analyz 36 general hospitals and 85 hospitals according to the index displaying variation against the previous year. Results : For general hospitals, borrowings in cash flow from financing activities increased as net income decreased; while depreciation etc increased in cash flow from operating activities. For hospitals, borrowings in cash flow from financing activities increased as the gain on disposition of tangible assets in cash flow from operating activities decreased. Conclusions : General hospitals need to control the management of borrowings and depreciation at the level of funding management; whereas hospitals need to manage of future cash forecasts for stability of operational funds.

• The Journal of Asian Finance, Economics and Business
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• v.3 no.4
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• pp.67-79
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• 2016

Prior literature expects a lower marginal cash value for weaker governance firms. We test this empirical hypothesis by using the sample of publicly traded Korean firms from 2005 to 2013. To measure the quality of governance structures, we employ the corporate governance scores provided by Korean Corporate Governance Services. The empirical model of Faulkender and Wang (2006) is adopted to estimate the marginal value of cash. Our empirical analysis shows a higher marginal value of cash for the good governance firms in the examination of the total governance score. This finding is consistent to the agency view of cash policy predicting a larger marginal value of cash for the firms with higher governance scores. However, this positive relationship is not robust for a subset of detailed governance scores; a lower marginal cash value is observed for the firms with better qualities of board structure, auditing, dividend policies. Moreover, our empirical analysis verifies a quite low level of marginal cash value for Korean firms, which supports the existence of severe agency conflicts in Korean corporations. Our results verify the significant role of agency conflicts between a manager and shareholders in the determination of marginal cash values in the Korean firms.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.5
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• pp.19-29
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• 2020

The paper examines the impact of information about cash flow from operating activities of firms listed on Vietnam's stock market to the decision making of individual investors. Data were collected from interviews with 160 individual investors about their investment decisions based on information on profit growth and cash flow growth from operating activities. T-test was conducted to research on Vietnam's stock market - a market considered as information that is not really public, transparent and ineffective. The research results show that: (1) investors do not care about cash flow from operating activities when making investment decisions if the company's profits grow positively, (2) information about cash flow from operating activities only affects the decisions of individual investors once profit growth is negative, and (3) conflicting information between profit growth and cash flow growth from business activities significantly affects the confidence and comfort of investors in Vietnam's stock market when they make investment decisions. Then, the study points out the mistake of investors when making investment decisions, and offers recommendations to investors when making investment decisions, not only concerned with profit growth, but also paying special attention to cash flow growth, especially cash flow from the company's business operations.

• Journal of Construction Engineering and Project Management
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• v.3 no.1
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• pp.1-9
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• 2013

Construction is a competitive industry and successful contractors must be able to win bids to obtain projects. Cash flow analysis not only determines actual profit at the end of the project, but also estimates required cash resources or cash ballances at the end of every month. Cash flow analysis is important in managing a construction project; however, it requires extensive information that is not immediately available to the general contractor. Before contractors can perform cash flow analysis, they must first complete a series of pre-requisites such as the quantity take off, scheduling, and cost estimating, followed by accurate assessments of project costs incurred and billable progress made. Consequently, cash flow analysis is currently a lengthy, uncertain process. This paper suggests improved cash flow analysis can be developed using data extraction in Building Information Modeling (BIM). BIM models contain a wealth of information and tools have been developed to automate a series of process such as quantity takeoff, scheduling, and estimating. This paper describes a prototype tool to support BIM-based, automated cash flow analysis.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.2
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• pp.247-255
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• 2019

This study examines the different roles of cash flow in assessing investment returns in the Association of Southeast Asian Nations (ASEAN). The analysis covers over 900 listed firms across Malaysia, Indonesia, Philippines, Singapore and Thailand for the period post the Asian financial crisis of 2001-2017. Firm-level panel data analysis shows that cash flow factors are important in all contexts of cash return on assets, earnings quality and market value multiple across the region even after controlling for typical measures of profitability. The results suggest that firms should manage cash flow prudently in considerations of firm value from the shareholder's perspective, measured directly using stock return. Cash profitability on assets should become an important firm performance indicator, whilst higher cash component over reported earnings is preferred. The market also tends to respond favourably to cash flow yield as a price multiple in valuation, outpacing the role of earnings yield. Such findings are robust across the pre and post subprime crisis periods, across estimation methods pertaining to finance panel standard errors, as well as across static and dynamic considerations of returns. It is hence sensible to consider cash flow factors in the research pertaining to asset pricing and factor investing in the ASEAN region.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.3
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• pp.135-147
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• 2022

This study was conducted to determine whether there is a significant relationship between board structure and board committee qualities and corporate cash holdings in Pakistan. For this objective, 168 listed enterprises on the PSX for the period 2016 to 2020 were chosen as a sample from a population of 436 non-financial firms. Multiple regression analysis was used in the study to discover a relationship between board structure and board committee features and cash holdings. The study's findings revealed that board size, executive directors, and board independence have no significant impact on the firm's cash holding because they play no important part in the firm's cash holding. Auditors, audit committee size, audit committee meetings, and the compensation committee, on the other hand, have no major impact on the firm's cash holdings because they are not relevant indicators to compare with cash holdings. While board meeting frequency and leadership structure both have a negative influence on cash holding, board meeting frequency increases firm costs, whereas leadership structure causes agency problems. Results were supported by the pecking order theory, cash flow theory, and agency theory.

• The Korean Journal of Financial Management
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• v.25 no.2
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• pp.137-164
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• 2008

This paper examines the operating performance of firms that for a four-year period, held more than 15% of their assets in cash and cash equivalents. During next four years, operating performance of firms maintaining high cash persistently is greater than the performance of firms matched by size and industry or firms adopting transitory high cash policy. Furthermore, the effect of persistent cash holdings on operating performance depends on the ownership structure and the level of information asymmetry. Foreign investors deteriorate the operating performance of high cash firms, suggesting that potential M&A and the pressure of excessive dividend reduce the usefulness of cash. The level of information asymmetry enhances the operating performance for the firms adopting persistent high cash policy. It suggests that cash holdings reduce the costly external financing and underinvestment problem for firms with high information asymmetry.

• Proceedings of the Korean Institute Of Construction Engineering and Management
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• autumn
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• pp.35-41
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• 2002

This research introduces the development of a project-level cash flow forecasting model in construction stage based on the planned earned value and the cost from a general contractors view on a jobsite. Most previous models have been developed to assist contractors in their pre-tendering or planning stage cash flow forecasts. The critical key to cash flow forecasting at the project level is how to build a cash-out model. The basic concept is to use moving weights of cost categories in a budget over project duration. The cost categories are classified to compile resources with almost the same time lags that are based on contracting payment conditions and credit times given by suppliers or venders. For cash-in, net planned monthly-earned values are simply transferred to the cash-in forecast, to be applied there with billing time and retention money. Validation of the model involves applying data from on-going 4 projects in progress for 12 months. Based on the results of the comparative analyses through the simulation of the proposed model and the existing models, the proposed model is more accurate, flexible and simpler than traditional models to the employee of construction jobsite who is not oriented financial knowledge.