Home About Us Writing a Scientific Article Author's Instruction Contact us
 

MERIT RESEARCH JOURNAL OF EDUCATION AND REVIEW (MRJER) (ISSN: 2350-2282) (e-ISJN: A4372-2954)

 
 

/  /    ER Home   /   /    About ER    /  /    Submit Manuscripts    /  /      Call For Articles      / /     Editorial Board     / /    Archive     / /    Author's Guide  /  /

 
 


November 2019 Vol.7 No.11

Other viewing option


Abstract
• Full text
•Reprint (PDF) (384KB)


Search Pubmed for related articles by:
 

Awan UA
Mahmood MT

Other links:
PubMed Citation
Related articles in PubMed

















































































































































 

Merit Research Journal of Education and Review (ISSN: 2350-2282) Vol. 7(11) pp. 124-139, November, 2019

Copyright © 2019 Merit Research Journals

DOI: 10.5281/zenodo.3558752

Original Research Article

Impact of Conditional Conservatism and Agency Cost on Investment Cash Flow Sensitivity

 
 
 

Usman Ali Awan*, Ahmed Imran Hunjra, Waqas Zaman and Muhammad Tariq Mahmood

 

University Institute of Management Science-PMAS- Arid Agriculture University Rawalpindi, Pakistan

*Corresponding Author’s E-mail: usman_awan210@hotmail.com

Accepted November 18, 2019

 

Abstract

 

Purpose of this research is to give the factual confirmation about the impact of conditional conservatism over the company investment cash flow sensitivity and its impact is more on those firms with higher agency cost as compared to lower agency cost firm. Researcher used the dividend payout ratio to estimate the cost of the agency, as the study uses Pakistan as a research condition in which organizations in Pakistan focus concentrated ownership and financing through debt, in this case the conflict of the agency which seems to be the most commanding is the agency’s dispute. This study used secondary data which is collected from the listed manufacturing company’s annual reports available on their website on Pakistan Stock Exchange. Study used sample of 147 companies of manufacturing sector listed and traded on the Pakistan Stock Exchange during the period 2008 to 2017, out of them 73 companies were high agency cost firms and 74 were low agency cost firms. Study used ordinary least squares regression. The results indicate that timely recognition of losses (application of conditional conservatism), firm sensitivity of investment to its cash flows reduces. Conditional conservatism reduces investment cash flow sensitivity in higher agency cost firms however expands the sensitivity in lower agency cost firms. Actually, prior to execution of conditional conservatism, high agency cost firms have lower investment cash flow sensitivity.

Keywords: Conditional Conservatism, Investment – Cash flow Sensitivity, Agency Cost, Dividend Payout Ratio























 































 

 

 

















 
 


 






 




 
 









 








 
























 

 
 
   
   
   
   
   
   
   
   
   
   
   
 
 
 
 
 
 
 
 
   
 
                         

                             Merit Research Journals© 2019 || Advertisement | Privacy policy.