Impact of political costs on company benefits in the institutions with high free cash flow and low growth opportunity: Evidence from Tehran Stock Exchange

Pasandidehfar, M.; Shahverdiani, S.; Gohar, M.

Growing Science » Accounting » Impact of political costs on company benefits in the institutions with high free cash flow and low growth opportunity: Evidence from Tehran Stock Exchange

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ISSN 2369-7407 (Online) - ISSN 2369-7393 (Print) Quarterly Publication Volume 2 Issue 3 pp. 137-142 , 2013

Impact of political costs on company benefits in the institutions with high free cash flow and low growth opportunity: Evidence from Tehran Stock Exchange Pages 137-142 Download PDF

Authors: Mohammad Pasandidehfar, Shadi Shahverdiani, Mohsen Hashemi Gohar

DOI: 10.5267/j.ac.2016.2.001

Keywords: Political costs, Free cash flow, Growth opportunities, Politically considerations

Abstract: The political costs, bonuses paid to managers, how to use the growth opportunities obtained and their effects on the profitability of companies are the issues that have always been a major of corporations’ concerns. Company exposure to political decisions, its costs and effects on the company's cash flow is very important. Hence, understanding the relationship between variables in a company and how they influence on each other helps management decisions for better opportunities and reduction in political costs, increase cash flow and ultimately increase the profitability of the firms. This survey studies the relationship between the impact of political costs on companies with high free cash flow and low growth opportunity. In this survey, company's assets, sales, income and number of employees are estimated. Then the indexes related to these costs are evaluated based on the tax component, the cost of the sports, personnel costs and relationships among them. Pearson correlation coefficient, regression coefficients and analysis of variance have been used to examine the hypotheses of the survey. The results show that the political cost, high free cash flow and low growth opportunity had negative correlations with each other. In other words, there was a negative relationship between profit and political costs in companies with high free cash flow and low growth opportunity. Moreover, high free cash flow and low growth opportunities had significant effect on the relationship between political costs and benefits in companies listed in Tehran Stock Exchange.

How to cite this paper

 Pasandidehfar, M., Shahverdiani, S & Gohar, M. (2013). Impact of political costs on company benefits in the institutions with high free cash flow and low growth opportunity: Evidence from Tehran Stock Exchange.Accounting, 2(3), 137-142.

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