Asian Journal of Research in Banking and Finance
Year : 2015, Volume : 5, Issue : 3
First page : ( 88) Last page : ( 98)
Online ISSN : 2249-7323.
Article DOI : 10.5958/2249-7323.2015.00046.2

Investigating the Effect of Discretionary Accruals on Free Cash Flows

Nozarpour Mahmoud, Hassanpour Fereydun

Master Student, Department of Accounting Persian Gulf International Branch, Islamic Azad University, Khorramshahr, Iran

Online published on 4 March, 2015.

Abstract

The effect of discretionary accruals on free cash flows will be investigated in this research. The independent variables include discretionary accruals, non-discretionary accruals, and receivables changes, and the dependent variable is the free cash flows. Accordingly, relevant data of 129 companies accepted in Tehran exchange securities was extracted for time period of 2009–2013, and the mix data regression model was used to test the hypotheses. The research results show that there is a significant positive relationship between the discretionary accruals and changes of receivable accounts and free cash flows. Also, the results indicate that increasing the discretionary accruals leads to increasing the free cash flows and positive changes in receivables shows the company sales increasing.

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Keywords

Free cash flow, discretionary accruals, non-discretionary accruals, receivables changes.

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