Skip to main content

THE FREE CASH-FLOW THEORY VERSUS FINANCIAL CONSTRAINTS, INVESTMENTS, CORPORATE GOVERNANCE AND SOFT BUDGETING PROBLEMS

Buy Article:

$20.79 plus tax (Refund Policy)

The supposed preference of firms for internal financial sources to fund their investments can be explained by either the free cash-flow or the financial constraints theories, both relying on asymmetric information. Neither theory was found fully valid by recent research. Using a French data panel, conclusive evidence will be made in favour of the free cash-flow theory in special cases. The validity of the free cash-flow theory in special cases will bring new issues to light with the introduction of a new definition: soft budgeting problem of capital. Through this analysis, the possible interaction between capital market imperfections and general equilibrium will also gain new dimension.
No References
No Citations
No Supplementary Data
No Data/Media
No Metrics

Keywords: corporate governance; free cash-flow theory; soft budgeting problems

Document Type: Research Article

Publication date: 2001-12-19

More about this publication?
  • Terms & Conditions
  • Ingenta Connect is not responsible for the content or availability of external websites
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
X
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more