In this work, we build on a previous real options approach that utilizes managerial cash-flow estimates to value early stage project investments. Through a simplifying assumption, where we assume that the managerial cash-flow estimates are normally distributed, we derive a closedform solution to the real option problem. The model is developed through the introduction of a market sector indicato...

This paper examines empirically the effect of firm growth opportunities and earnings quality on the market valuation of free cash flow, defined as the difference between operating cash flows and capital expenditures. Equity valuation theory prescribes that free cash flow should not be associated with stock returns because it does not add value. However, free cash flow could become a value-relev...

Casella for invaluable guidance during my program. I would also like to thank Professors Peter Wilson, Vic Bernard and Tom Stober for their willingness to answer questions and offer advice. Financial support from the Arthur Andersen Foundation, the Social Sciences and Humanities Research Council of Canada, and the UW/SSHRC grant program during various stages of this work was greatly appreciated...

business is business! And business must grow –Dr. Seuss, The Lorax The paper investigates the agency argument that sales growth in firms with free cash flow (and without strong governance) is less profitable than sales growth for firms without free cash flow. It also tests whether strong governance conditions improve the performance of firms with free cash flow and/or limit the investments in u...

Service firms seek customers with high revenues, profits, or lifetime value. However, they frequently ignore variations in consumption that lead to cash flow variability and adversely influence service operations and financial performance. This study shows that variation in individual customers’ consumption or spending on services can be decreased in ways that are actionable by most managers, w...

The purpose of this paper is to investigate the causes and consequence of cash flow sensitivity. While cash flow has been regarded as an agency problem, empirical investigations in context of managerial conservatism or optimizing behavior are limited. In this paper we investigate two key aspects of cash flow sensitivity: whether cash flow sensitivity causes variations in fixed asset investments...

In order to improve the accuracy of all kinds of information in the cash business and enhance the linkage between cash inventory forecasting and cash management information in the commercial bank, the first moving average prediction method, the second moving average prediction method, the first exponential smoothing prediction and the second exponential smoothing prediction methods are adopted ...

Many models have been developed to assist contractors and clients in their cash flow forecasting. The majority of these have been based on standard cash flow S-curves, developed using the traditional manual approach, mathematical and statistical models. Many of these models failed to consider and analyse the factors responsible for the considerable variations in the modelled cash flow profiles....