Tender Offers and Free Cash Flow: An Empirical Analysis

High free cash flow firms are characterized by a mismatch between growth opportunities and resources. High free cash flow target firms receive higher-than-average abnormal returns. Target returns are lower when the bidder is a high free cash flow firm. During the 1970s, results suggested that cash-flow-rich bidding firms pursued low-benefit takeovers. During the 1980s, high free cash flow firms became the targets of tender offers. Results are consistent with the notion that reducing agency problems in target firms generates benefits and that bidding firms with large free cash flow undertake low-benefit acquisitions.     

An Empirical Examination of Cash Flow Measures

In recent years in the United States and Canada, there has been an increasing interest in cash flow reporting and a strengthening belief that information on cash flows is valued in the marketplace. However, little research has been devoted to the issue. Regulatory bodies in the U.S. (Financial Accounting Standards Board) and Canada(Canadian Institute of Chartered Accountants) require that an enterprise should disclose separately cash flows from operating, financing and investing activities in their cash flow statements. The data in the cash flow statements are expected to help investors assess the firm's liquidity, financial flexibility and risk. On the other hand, the British Accounting Standards Committee (ASC) does not require a statement of cash flows. This study employs a cross-sectional equity valuation model to examine the association of cash flows from operating, financing and investing activities with security prices. A sample of 403 U.S. firms is used for the ten-year period of 1976–85. The results of this study indicate that there exists a strong association between the various cash flow components included in the cash flow statements and the market value of the firm.     

以自由现金流为收益口径的评估模型比较

本文作者从分析资本结构与加权平均资本成本（WACC）、权益资本成本（Ke）、债权资本成本（Kd）之间是否存在函数关系人手,对FCFF评估模型和FCFE评估模型内在关联进行解析。并通过详细的案例分析,对这两种评估模型进行了深入比较。文章观点仍处探讨阶段。     

Why Do Managers Voluntarily Issue Cash Flow Forecasts?

We study a relatively recent change in voluntary disclosure practices by management, namely, the issuance of cash flow forecasts. We predict and find that management issues cash flow forecasts to signal good news in cash flow, to meet investor demand for cash flow information, and to precommit to a certain composition of earnings in terms of cash flow versus accruals, thus reducing the degree of freedom in earnings management. Our results also suggest that management discloses good news in cash flow to mitigate the negative impact of bad news in earnings, to lend credibility to good news in earnings, and to signal economic viability when the firm is young. Our finding that management cash flow forecasts primarily convey good news is in contrast to the generally negative nature of management earnings guidance and suggests that different incentives drive firms' disclosure of different financial information.     

The Relevance of a Segment Cash Flow Statement in Lending Decisions: An Empirical Study

The purpose of this study is to examine the relevance of a segment cash flow statement in the lending decisions of commercial bank loan officers. 117 loan officers made short term, intermediate term, and long term lending decisions using case materials prepared for a company that operates in two industries—soft drinks and farm machinery/equipment. Results indicate that segment cash flow statements are relevant in lending decisions under certain circumstances. When given the ‘good news’ that a stable industry was the cash source, loan officers in the soft drinks group granted more long term loans than those in the control group. When given the ‘bad news’ that a troubled industry was the cash source, loan officers in the farm group made smaller short term loans than those in the control group.     

An Empirical Analysis of Qualitative Management Earnings Forecasts

Despite efforts by the Securities and Exchange Commission (SEC) to encourage corporate disclosure of quantitative management earnings projections, only a small fraction of firms voluntarily do so. Instead of quantitative estimates, a large number of firms choose to disclose qualitative (verbal) assessments of their earnings prospects. This paper is a study of the information characteristics and the usefulness of this alternative form of forecast disclosure to investors. The study examines a sample of qualitative forecast statements from the 1979–1985 period and finds associations between these forecasts and percentage changes in realized earnings per share, the direction of financial analysts' forecast revisions following the disclosure of these forecasts, and abnormal stock returns on the date of their disclosure. These associations are, however, shown to be more significant for negative (bad news) than for positive (good news) forecasts.     

报表收益与现金流量数据之间关系的实证分析——信息不实公司的预警信号

本文通过对盈余操纵公司和未预亏公司现金流量与账面净收益之间关系的实证研究,得出净利润与调整后经营现金流量之间的差异可以作为盈余操纵的预警信号,现金流量减少可作为企业业绩下滑的预警信号的结论。     

An Empirical Test of Ross's Cash Flow Beta Theory of Capital Structure

This paper empirically investigates Ross's cash flow beta theory of capital structure. Ross hypothesizes that, for firms of similar cash flow variance, there will be an inverse relationship between financial leverage and cash flow beta. This paper provides empirical support for Ross's theory, though the extent of the support depends upon the sample period and the leverage specification.     

国库现金管理对我国货币政策的影响:一个实证分析

中央财政管理的国库资金是社会资金流量中的一个重要组成部分,对中央银行制定货币政策、调控货币供应量和公开市场操作都影响重大,在现代市场经济条件下,国库已成为连接财政和金融的窗口和桥梁,对财政政策和货币政策的有机配合发挥着重要的作用。本文以近年来我国正在开展的国库集中支付制度改革为背景,实证分析了国库现金管理对我国货币政策格局的影响,提出了我国进一步提高国库管理水平、加强货币政策管理的政策建议。     

Discounted Cash Flow Valuation for Small Cap M&A Integration*

Frank Batten rose to the upper ranks of the Forbes 400 by using his Norfolk newspaper as a base to consolidate publications and then later to create a media enterprise, including cable‐TV (which was eventually sold for $1.2 billion) and The Weather Channel (sold for over $3 billion). Batten's success offers a compelling case study of the often pursued but much maligned “roll up” strategy of mergers, providing evidence that the strategy can produce superior returns for those consolidators devoted to integrating small, value‐priced acquisitions within an industry niche. The author identifies three keys to Batten's success in making the strategy work: (1) aggressive, but astute, adoption of “best practices” and enhanced processes; (2) refinement of the business model to “roll out” the launch of like entities to underserved markets; and, most important, (3) identification and pursuit of innovative business development opportunities made possible by the consolidation. Too often, intricate discounted cash flow (DCF) analyses are used to justify disastrous valuations, such as the one that helped support Daimler's $37 billion acquisition of Chrysler. Landmark's employment of rigorous DCF analyses was valued primarily not as a guide to value, but rather as a way of assessing the economic drivers of the business, the opportunities to control costs, the rationality of forecasted growth rates, and the probability of competition and market forces affecting short‐ and longterm results. These analyses formed the basis for management's long‐term development goals. When seeking approval for a deal, however, the valuation depended on a simpler criterion: the multiple of the prior year's cash flow relative to prospective long‐term profit growth. In this regard, Batten's use of DCF was much more akin to Warren Buffett's “spontaneous” valuations, delivered “customarily within five minutes.”     

基于自由现金流量的组合投资策略与实证分析

基于自由现金流量的投资组合具有一般组合的优点，同时又克服了经典组合理论只关心历史数字而不追寻其内在经济原因的缺点。实证分析表明，FCF组合具有更小的波动性、更为稳定的回报和相对更小的风险。     

The Cash Flow Sensitivity of Cash

We model a firm's demand for liquidity to develop a new test of the effect of financial constraints on corporate policies. The effect of financial constraints is captured by the firm's propensity to save cash out of cash flows (the cash flow sensitivity of cash). We hypothesize that constrained firms should have a positive cash flow sensitivity of cash, while unconstrained firms' cash savings should not be systematically related to cash flows. We empirically estimate the cash flow sensitivity of cash using a large sample of manufacturing firms over the 1971 to 2000 period and find robust support for our theory.     

现金流量表编制方法分析

现金流量表作为多数企业的三张法定报表之类一，已经完全取代了财务状况变动表。在我国，其编报方法在实际工作中主要有工作底稿法、T形账户法、标行法、科目分析法。这些编报方法各有利弊，在实际工作中应该根据需要，谨慎选用。     

Valuation Weights,Linear Dynamics and Accounting Conservatism: An Empirical Analysis

Residual income models provide an important theoretical link between equity valuation and financial statement variables. While various researchers have developed models of how accounting policy impacts on the structure of these models, empirical support for these models is at best weak and frequently contradictory. In this paper, we develop an analytical model, which identifies the dependency between valuation weights in residual income models and the associated structure of earnings information dynamics and accounting conservatism. In contrast to many earlier studies, we find strong evidence of conservatism in our reformulation of the linear dynamics. We proceed to test our predictions of the dependency of the weights on two measures of conservatism, the conventional measure of price‐to‐book ratio and the recent measure of a C‐Score index developed by Khan and Watts (2009) and find that the empirical results accord well with our theoretical predictions in the case of the former but not the latter measure.     

Why Manufacture Offshore? An Empirical Analysis of Valuation Effects

In this study, announcements by U.S. firms of offshore joint venture manufacturing during the 1980s are used to provide more comprehensive evidence than past studies on the wealth effects of offshore joint ventures. Evidence shows that the target country's level of economic development and political stability, currency strength of the originating country (U.S. in this study) relative to that of the target country, U.S. firm's mode of entry, and the relative value of the U.S. firm's investment in the joint venture affect the wealth of U.S. firms which engage in offshore joint ventures. The target country's level of economic development, its political stability, and the currency strength of the originating country relative to the target country are shown to be the dominant economic factors. Of particular importance, evidence indicates that the target country's level of economic development is a more important determinant of excess returns than is its political stability.