The Effect of Free Cash Flow-based Agency Costs on Dividends in Companies Listed on the Tehran Stock Exchange (TSE)

Abstract

This study investigated the effect of free cash flow-based agency costs on dividends in a sample of 73 companies listed on the Tehran Stock Exchange during a period of five years from 2007 to 2011. The free cash flow-based agency costs were measured through several metrics including free cash flow, financial leverage, corporate growth, profitability, firm size and stock risk. The data were analyzed through multiple regression and panel method. The results of the statistical analysis concerning the research hypotheses in SPSS and E-VIEWS demonstrated that free cash flow and dividend corporate growth had an inverse effect on dividend. Moreover, the results suggested that financial leverage, profitability, firm size and stock risk left direct effects on dividend.

DOI: 10.5901/mjss.2016.v7n4S2p131