Effect of Principal-Principal Conflict on Relationship between Financial Flexibility with Investment Propensity and Dividend Payouts

Document Type : Research Paper

Authors

1 Associate Prof in Accounting. Faculty of Economic and Social Sciences, Shahid Chamran University, Ahvaz, Iran

2 Asistance Prof in Accounting, Department of accounting, Hashtrood Branch, Islamic Azad University, Hashtrood, Iran

3 Master of Accunting, Marand Branch, Islamic Azad University, Marand, Iran

Abstract

Flexibility can be viewed as a linkage between domestic and foreign borrowing capacity. Using accumulated internal funds, it enables the company to make growth choices at a right time in a competitive manner and do projects with positive net present values. However, the existence of Principal-principal Conflict resulted from the separation of ownership from management can affect this effectiveness. The purpose of this study is to investigate the effect of financial flexibility on the intensity of investment and dividend with emphasis on role of principal-principal Conflict in the companies admitted to Tehran Stock Exchange. In general, the use of a sample (102 companies) from Stock Exchange companies for the years 2011-2017, based on linear regression, suggests that the flexibility financial composite index has a significant positive effect on investment propensity and dividend policy. Likewise, the interactive effect of flexibility financial composite index and Principal-principal Conflict composite index have a moderating effect on investment propensity and dividend policy. It is also of a significant negative effect on the investment propensity and dividend policy.

Keywords

References

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History

  • Receive Date: 01 June 2019
  • Revise Date: 18 January 2020
  • Accept Date: 19 January 2020

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