Ownership structure and investment-cash flow sensitivity

This study investigates the effect of ownership structure on the use of cash flow in financing corporate investments—the investment-cash flow sensitivity—in a concentrated ownership context. Using a sample of 6797 French listed firms from 2000 to 2013, results show that investment-cash flow sensitivity decreases with the cash-flow rights of the controlling shareholder and increases with the separation of its cash-flow and control rights (excess control rights). Firms are, thus, less likely to use cash flow in investments when the interests of controlling shareholders are aligned with those of minority shareholders. However, they appear to use considerable internal funds for their investments when they have severe agency problems, driven by excess control rights of the controlling shareholders. Overall, our findings help advance the understanding of the role of agency relationship in shaping corporate financial policy

VALIDATION METHOD OF FUZZY ASSOCIATION RULES BASED ON FUZZY FORMAL CONCEPT ANALYSIS AND STRUCTURAL EQUATION MODEL

In order to treat and analyze real datasets, fuzzy association rules have been proposed. Several algorithms have been introduced to extract these rules. However, these algorithms suffer from the problems of utility, redundancy and large number of extracted fuzzy association rules. The expert will then be confronted with this huge amount of fuzzy association rules. The task of validation becomes fastidious. In order to solve these problems, we propose a new validation method. Our method is based on three steps. (i) We extract a generic base of non redundant fuzzy association rules by applying EFAR-PN algorithm based on fuzzy formal concept analysis. (ii) we categorize extracted rules into groups and (iii) we evaluate the relevance of these rules using structural equation model

Ownership structure and investment-cash flow sensitivity

peer reviewedThis study investigates the effect of ownership structure on the use of cash flow in financing corporate investments—the investment-cash flow sensitivity—in a concentrated ownership context. Using a sample of 6797 French listed firms from 2000 to 2013, results show that investment-cash flow sensitivity decreases with the cash-flow rights of the controlling shareholder and increases with the separation of its cash-flow and control rights (excess control rights). Firms are, thus, less likely to use cash flow in investments when the interests of controlling shareholders are aligned with those of minority shareholders. However, they appear to use considerable internal funds for their investments when they have severe agency problems, driven by excess control rights of the controlling shareholders. Overall, our findings help advance the understanding of the role of agency relationship in shaping corporate financial policy