Resumen de The impact of free cash flow on forecasted earning success in companies listed in tehran stock exchange
Fariba Jafari, Hamidreza Mohammadi, Mahmoudreza Rakhshani
In this study, we will focus on whether free cash flow in a company can be related to forecasted earning success which is considered as a crucial factor for investors’ decision-making. To this end, four hypotheses have been developed and tested. In the first hypothesis, the relationship between free cash flow and forecasted earning success was investigated and in other three hypotheses, this relationship was analyzed in large, medium and small companies. This study is a causal and ex-post facto research and the target population comprises all the companies listed in Tehran Stock Exchange. In the present study, 85 companies accepted in Tehran Stock Exchange in 2008-2014 were examined. To do the analyses, linear regression model (panel data) has been used. Further, Jarque-Bera, Chow and Hausman tests were applied respectively for data normality, integrated or fixed effects hypotheses and fixed or random hypothesis testing. The results demonstrate that there is a significant relationship between free cash flow and forecasted earning success. The existence of this relationship and the negative direction were also proved in the fourth hypothesis and the same relationship and its positive direction were also confirmed in the second hypothesis. But in the third hypothesis, the existence of such a relationship was not proved. That is, no relation was found between free cash flow and forecasted earning success in medium companies.
