The present study is aimed to examine the influence of social responsibility on the relationship between agency costs of free cash flow and the sensitivity of investment to cash flow. To do this, a sample of 133 companies listed on Tehran Stock Exchange (TSE) during 2011-2015 is investigated. The results of hypotheses test using panel data show that in the companies with high agency costs of free cash flow, the sensitivity of investment to cash flow is higher. Also, corporate social responsibility (CSR) has a negative and significant impact on the relationship between agency costs of free cash flow and the sensitivity of investment to cash flow. In other words, supporting CSR by the studied companies improves the quality of information and reduces the agency costs and by the reduction of shortcomings of capital market via the reduction of the gap between the internal and external resources, the investment - cash flow sensitivity is reduced.
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