Cash-flow Notation: We use (c0, c1, . . . , ci, . . . , cn) to denote the series of cash-flows where ci is received at time t = i . The length of a period, i.e. the interval of time between t = i and t = i + 1, will usually be understood from the context. Negative cash-flows refer to cash payments. The initial cash-flow, c0, will often be negative while the remaining cash-flows are positive. Th...

Public firms in the United States that provide better insurance against productivity shocks to their workers experience higher cash flow volatility. Difference in intra-firm risk sharing between workers and capital owners accounts for more than 50% of the variation in firm-level cash flow volatility. I develop a theory in which wages can act either as a hedge or as leverage, depending on the hi...

this paper examines the accuracy of valuation models in providing reasonable estimation of the market values of listed companies in tehran stock exchange (tse). six valuation models including gordon growth model, two stage dividend discount model, adjusted present value, price to earning ratio and residual income were examined in this study. in addition, three proxies represent the market value...

However, the free cash flows scale is important for the financial health of the company, but it has also its own limitations. Moreover, it’s not immune from accounting tricks. Free cash flows can be considered as a measure of value for shareholders of listed companies on Tehran Stock Exchange. The managers of these companies have tended to use the earnings management for managing the free cash ...

This paper provides new evidence on the predictive power of dividend yields for U.S. aggregate stock returns. Following Miller and Modigliani, we construct a measure of the dividend yield that includes all cash flows to shareholders. We show that this alternative cash-flow yield has strong and stable predictive power for returns, and appears robust to a battery of tests that have been proposed ...

after-tax cash flows to differ from its before-tax cash flows. To estimate the future cash flows that are to be generated by a proposed foreign project (such as the establishment of a new subsidiary or the acquisition of a foreign firm), MNCs must first estimate the taxes that they will incur due to the foreign project. This appendix provides a general background on some of the more important i...

This paper presents a simple Excel model that provides measures of the standard deviation of forecasted internal rate of return (IRR) given traditional data inputs such as annual cash flows, terminal values and equity. The model first calculates IRR using traditional discounted cash flow methods and then provides heuristic estimates of variability measured in terms of ‘‘high,’’ ‘‘low’’ and ‘‘mo...

This paper presents a model for optimally designing a collateralized mortgage obligation (CMO) with a planned amortization class (PAC)-companion structure using dynamic cash reserve. In this structure, the mortgage pool’s cash flow is allocated by rule to the two bond classes such that PAC bondholders receive substantial prepayment protection, that protection being provided by the companion bon...

Shareholders have imperfect control over the decisions of the management of a firm. We integrate a widely accepted version of the separation of owership and control — Jensen’s (1986) free cash flow theory — into a dynamic equilibrium model and study the effect of imperfect corporate control on asset prices and investment. We assume that firms are run by empire-building managers who prefer to in...

Owing to the agentification of the Government Housing Loan Corporation, Japanese private financial institutions are now developing long-term fixed-rate loans. In order to reduce the risk of yielding mismatches between asset and liability, financial institutions will sell out their loans by securitization instead of holding loans themselves. Mortgage backed security (MBS) is a product of mortgag...