Free Cash Flows, Overinvestment and Boards of Directors Control
Using the general principles of Jensens free cash flow hypothesis, this paper analyzes the relationships between overinvestment and free cash flow, as well as the boards of directors. On this basis, Regression results show that overinvestment is positively correlated to free cash flows, suggesting that when there are free cash flows in firms, managers are motivated to overinvest. These relationships are much stronger for firms with high free cash flow and low investment opportunities. Meanwhile, research results also show that, although boards of directors takes important responsibilities for shareholders interests, board of directors doesnt performs functions well.
growth opportunities overinvestments-free cash flow sensitivity boards of directors control
CAI Jifu
Accounting School, Jiangxi University of Finance and Economics, Nanchang, P.R.China, 330013
国际会议
威海
英文
867-871
2010-07-24（万方平台首次上网日期，不代表论文的发表时间）