- Determinants on Capital Expenditure of Non-Financial Listed Companies on Hanoi Stock Exchange. - Capital expenditure is cash outflows for property, plant and equipment. - Capital expenditure decision is a strategic decision at both the macro and micro levels. - Capital expenditure is one of the most crucial managerial decisions whether at the institutional (macro) or the organizational (micro) levels. - At the macro level, capital expenditure affects aggregate demand and gross national product, economic development and business cycles. - This paper attempts to find empirical evidences of the factors affecting capital expenditure of non-financial listed companies on the Hanoi Stock Exchange. - By using General Method of Moments (GMM), the results of the study showed that the free cash flow and company size have positively effect on capital expenditure while interest expense and depreciation expense have negatively effect on capital expenditure of non-financial companies listed on the Hanoi Stock Exchange. - Capital expenditure is considered as cash flows for investment on property, plants and equipment. - Capital expenditure have a great influence on the production and business process in the digital era. - This paper calculated free cash flow from Operating Income + Depreciation – Income Taxes – Dividends (Vogt, S. - Study factors that influence capital expenditure are significant in both theoretical and practical aspects.. - Decision on capital expenditure is a strategic decision at both macro and micro levels. - At the macro level, capital expenditure influences aggregate demand and gross national product, economic development, and business cycle. - At the micro level, the decision to capital expenditure will influence the decision to produce and to make strategic plan. - Therefore, to make a rational decision, the enterprise need to carefully consider the factors affecting the capital expenditure.. - However, researchers still have not agreed on the factors affecting capital expenditure and the relationship between free cash flow and capital expenditure. - Therefore, the study "Determinants on capital expenditure in non-financial listed companies on the Hanoi Stock Exchange". - The difference between equity issued and pay- outs of the firm is equal to its free cash flow. - Jensen (1986) adds that free cash flow as a cash in surplus of that necessary to fund all positive net present value projects. - There are many studies to find the factors that affect the decision for capital expenditure in the enterprise. - Meyer and Kuh (1958) investigated the determinants of capital expenditure at 600 US companies, indicating that firms generally favor internal cash flow and that when funds are available from inside the company, the company decides to invest more.. - The results of Alti (2003) showed that the relationship between investment and cash flow is stronger in companies that are in growth stage. - Alti (2003) continues to expound that investment is sensitive to cash flow. - This makes capital expenditure highly sensitive to free cash flow.. - Dividend Payout Ratio (DPR) and depreciation are among the variables tested and found to affect capital expenditure. - From the analysis DPR and depreciation have a negative relationship with capital expenditure. - It was further revealed that DPR and depreciation have a fairly significant relationship with capital expenditure, whereas Free Cash flows had a significant relationship with capital expenditure.. - Sigeng Du (2016) tried to determine the relationship between free cash flow and capital expenditure of Canadian listed companies and how this will affect the future cash flow of the firms. - This research was carried out using a sample of 90 listed companies in Canadian from 2010 to 2015 to test the relationship between free cash flow and capital expenditure. - Dividends and depreciation are among the variables tested and found to affect capital expenditure. - Capital expenditure have a positive relationship with firm size and depreciation. - From the analysis, free cash flow has a negative relationship with capital expenditure. - Normally, firms with more free cash flow will make more investments. - This paper only used three variables as the measure of relationship between free cash flow and capital expenditure, so that there is a need to run this model with other different factors to make sure if other variables will have effects on the relationship with free cash flow in Canadian quoted companies. - Geng and N’diaye (2012) observed that at the aggregate level, a 100 basis points increase in real interest rates reduces corporate capital expenditure in Canada by about ½ percent of GDP. - Interest rates have a big influence on big companies’ free cash flow. - Once interest rate goes up, much extra interest expense will be deducted from free cash flow and some projects may be cancelled because the increase of the interest expenses may lead to a negative NPVs.. - Navid Saffarizadeh (2014) has focused on the relationship between cash flow and capital expenditure in the automobile industry of Germany, which is the absolute leader of. - Automobile industry uses heavy capital expenditure.. - This amount of capital expenditure caused by changing models very frequently and most of it is needed for different levels in the industry such as design, production of new panels, presses, software, etc. - The long run models in the present thesis show that cash flow and capital expenditure have statistically significant and negative relationship. - Error correction model shows that capital expenditure converge to its long term equilibrium level at 31 percent speed of adjustment by the contribution of cash flow from operating activities which can be assumed as a reasonable convergence in terms of econometrics. - As results prove in this study, the relationship between cash flow and capital expenditure is not positive and can move up and down during different cycles of large and small capital expenditure. - The result obtained in this study shows a negative relationship between cash flow and capital expenditure in the automobile sector which is a capital intensive industry. - The final results are inconsistent with the findings of Vogt (1997) who tried to investigate the relationship between cash flow and capital expenditure in 421 firms.. - He found out that capital expenditure is related to the level of cash flow strongly and positively.. - Firstly, the factors that influence capital expenditure in the enterprise are not consistent between the studies. - Therefore it is needed to study to get further supplement evidence of the factors affecting capital expenditure in businesses.. - Capital expenditure affecting the success and failure of each enterprise. - Therefore, the enterprise needs to consider the factors influencing capital expenditure as follows:. - (i) Factor 1: Free cash flows. - Free cash flow is a measure of the ability of a company to generate cash flow to execute new PPE investment projects and maintain its business. - Free cash flow is more important than other measures to check the financial situation. - Free cash flows and stable free cash flow shows good performance of the company and asserts that the company has chosen good projects to invest. - Hypothesis 1: Free cash flow has positive effect on capital expenditure of non- financial companies listed on the Hanoi Stock Exchange. - Hypothesis 2: Dividends has positive effect on capital expenditure of non-financial companies listed on the Hanoi Stock Exchange. - Loan interest is a major factor influence on capital expenditure. - According to Rittenberg and Tregarthen (2014), the relationship between interest rates and capital expenditure is counter-productive. - Interest rates have a large impact on the free cash flow of large companies. - When interest rates rise, extra interest rates will be deducted from free cash flow and. - Hypothesis 3: Interest expenses has positive effect on capital expenditure of non- financial companies listed on the Hanoi Stock Exchange. - Hypothesis 4: Depreciation has positive effect on capital expenditure of non-financial companies listed on the Hanoi Stock Exchange. - Alti (2003) said that capital expenditure is sensitive to cash flow and the sensitivity is greater for young, small firms with high growth rates and low payout ratios.. - Hypothesis 5: The firm size has positive effect on capital expenditure of non-financial companies listed on the Hanoi Stock Exchange. - Hypothesis 6: Working capital has positive effect on capital expenditure of non- financial companies listed on the Hanoi Stock Exchange. - Financial year begin January 1 st to December 31 st and there must have information on capital expenditure for at least three consecutive years.. - In this research, we employ 3 regression models: random effects model (REM), fixed effeccts model (FEM) and generalized method of moments (GMM) to analyze the relationship between free cash flow and capital expenditure based.. - In corporate finance, free cash flow can be calculated in variable ways depending on available data. - According to this paper and some relevant variables, calculating free cash flow as follows:. - Free Cash Flow = Operating Income + Depreciation – Income Taxes – Dividends (Source: Vogt, S. - Dependent variable is CE i, t: Capital expenditure in company i, in year t Independent variables include:. - CEi, t-1: Capital expenditure for fixed assets in company i, in year t-1 FCFi, t: Free cash flow of firm i, in year t. - The value of free cash flow is calculated by the following formula. - Free cash flow = Operating profit before tax + Depreciation - Corporate income tax - Dividends paid (Source: Vogt, 1997). - Research results indicate that free cash flow (FCF), firm size (SIZE), interest expense (IE), working capital (WC) have close relationship with capital expenditure but in different directions. - In particular, free cash flow (FCF), the size of the company (SIZE) positively affects the cost of capital expenditure (CE) while interest expense (IE) and working capital (WC) Depreciation (DPRN) have the opposite effect on capital expenditure (CE). - The relationship between cash flow and capital expenditure is an important ratio for researchers and investors. - The significance of this relationship demonstrates the ability of the companies listed on Hanoi Stock Exchange to acquire long-term assets by using free cash flow. - As the rate of relationship between cash flow and capital expenditure increases, it can be a positive sign.. - From the organizations considered, it was established that there is a positive fairly significant relationship between free cash flows and capital expenditure that is as the level of free cash flows increase, the level of capital expenditure increases. - Secondly, the results of the study show that the dividend is not related to the capital expenditure. - His findings revealed that capital expenditure decisions and dividend decisions are not correlated. - According to Rittenberg and Tregarthen (2014), there is a negative relationship between interest rate and capital expenditure. - Higher interest rate can increase the cost of borrowing used to finance capital expenditure and can reduce the quantity of investments.. - Fourthly, the results of the study show that depreciation are inversely related to the capital expenditure. - asset depreciation expense), the enterprise will not pay attention on capital expenditure. - Fifthly, the research results show that the size of the company is closely related to the capital expenditure of company. - Sixth, the study found that working capital was negatively correlated with capital expenditure on fixed assets. - Therefore, the relationship between capital expenditure and working capital is counter- productive. - Firstly, in this study, it was observed that the relationship between free cash flows and capital expenditure of firms quoted at the Hanoi Stock Exchanges have a fairly significant relationship. - Capital expenditure is a payment where the benefit continues over a long period and it will improve productivity of enterprises. - We are living in the digital age, biotechnology and computer development transforming all aspects of global socio-economic life, so raising capital expenditure to keep up the trend of the development of the era is a wise choice.. - Factors affecting the decision to spend on capital expenditure are free cash flow of the company, the size of the company, the interest expense and working capital. - (2003), “How sensitive is investment to cash flow when financing is frictionless. - (2006), “The effect of financial development on the investment-cash flow relationship cross-country evidence from Europe”, ECB lamfalussy fellowship programme. - Sivadasan, (2006) “The effect of financial development on the investment-cash flow relationship: cross-country evidence from Europe” ECB publications.. - (2009), “Cash flow sensitivity of investment.. - Navid Saffarizadeh (2014), “The Relationship Between Cash Flow And Capital Expenditure: Evidence From German Automobile Sector”, in partial fulfillment of the requirements for the Degree of Master of Science in Banking and Finance Eastern Mediterranean University. - Sigeng Du (2016), “Testing the relationship between Free Cash Flow and Capital Expenditure in Canadian listed companies”, A Research Project Submitted in Partial Fulfillment of the Requirements of the Degree of Master of Finance Saint Mary’s University.. - Cash flow and capital spending: Evidence from capital expenditure announcements
Xem thử không khả dụng, vui lòng xem tại trang nguồn hoặc xem
Tóm tắt