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Examining the sources of financial flexibility: A study of firms listed in Sweden

Sayyad, Karim LU and Aneheim Ulvenäs, Joel (2012) BUSN88 20121
Department of Business Administration
Abstract
This study aims to determine the significance of different sources of financial flexibility that enables firms to respond to negative shocks or investment opportunities in form of unexpected periods of insufficient resources. The empirical study is based on a model that proxy for firms’ investment and dividend policies to further examine how possible cash shortfalls is resolved. The sample covers the OMXS30 during the time period 1995-2011. The model is extended, using cross-sectional determinants, recognizing the importance of financial flexibility and its potential impact on financial policies. The findings suggests that there exist significant cross-sectional differences in how firms resolve cash shortfalls and that asset sales appear... (More)
This study aims to determine the significance of different sources of financial flexibility that enables firms to respond to negative shocks or investment opportunities in form of unexpected periods of insufficient resources. The empirical study is based on a model that proxy for firms’ investment and dividend policies to further examine how possible cash shortfalls is resolved. The sample covers the OMXS30 during the time period 1995-2011. The model is extended, using cross-sectional determinants, recognizing the importance of financial flexibility and its potential impact on financial policies. The findings suggests that there exist significant cross-sectional differences in how firms resolve cash shortfalls and that asset sales appear to be the most common method for firms to raise funds in face of cash shortfalls. Possible explanation of this is provided in agency theory and pecking-order theory, calling for further research. (Less)
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author
Sayyad, Karim LU and Aneheim Ulvenäs, Joel
supervisor
organization
course
BUSN88 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Financial flexibility, Financial policy, Dividend policy, Cash shortfalls
language
English
id
2544425
date added to LUP
2012-06-27 14:47:23
date last changed
2012-06-27 14:47:23
@misc{2544425,
  abstract     = {This study aims to determine the significance of different sources of financial flexibility that enables firms to respond to negative shocks or investment opportunities in form of unexpected periods of insufficient resources. The empirical study is based on a model that proxy for firms’ investment and dividend policies to further examine how possible cash shortfalls is resolved. The sample covers the OMXS30 during the time period 1995-2011. The model is extended, using cross-sectional determinants, recognizing the importance of financial flexibility and its potential impact on financial policies. The findings suggests that there exist significant cross-sectional differences in how firms resolve cash shortfalls and that asset sales appear to be the most common method for firms to raise funds in face of cash shortfalls. Possible explanation of this is provided in agency theory and pecking-order theory, calling for further research.},
  author       = {Sayyad, Karim and Aneheim Ulvenäs, Joel},
  keyword      = {Financial flexibility,Financial policy,Dividend policy,Cash shortfalls},
  language     = {eng},
  note         = {Student Paper},
  title        = {Examining the sources of financial flexibility: A study of firms listed in Sweden},
  year         = {2012},
}