Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/44005
Title: Does free cash flow problem contribute to excess stock return synchronicity?
Authors: Cheung, WM
Jiang, L 
Keywords: Discretionary accruals
Free cash flow problem
Opaqueness
Stock return synchronicity
Issue Date: 2016
Publisher: Springer
Source: Review of quantitative finance and accounting, 2016, v. 46, no. 1, p. 123-140 How to cite?
Journal: Review of quantitative finance and accounting 
Abstract: We investigate whether Jensen’s free cash flow problem contributes to excess stock return synchronicity. We find that low-growth firms with high free cash flow have greater stock return synchronicity. These firms also engage in earnings management to lower their disclosure quality. To the extent that free cash flow for low-growth firms provides corporate insiders an opportunity to extract private control benefit, our findings lend direct and concrete support to Jin and Myers (J Financ Econ, 79:257–292, 2006) prediction that insiders increase opaqueness to capture cash flow beyond the level expected by outsider investors. We identify Jensen’s free cash flow problem as an important driver for stock return synchronicity.
URI: http://hdl.handle.net/10397/44005
ISSN: 0924-865X
DOI: 10.1007/s11156-014-0464-2
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