Analysing the Impacts of Free Cash Flow, Agency Cost and Firm Performance in Public Listed Companies in Malaysia

Authors

  • Noraina Mazuin Sapuan Faculty of Industrial Management, Universiti Malaysia Pahang, Malaysia
  • Norwazli Abdul Wahab Faculty of Industrial Management, Universiti Malaysia Pahang, Malaysia
  • Muhammad Ashraf Fauzi Faculty of Industrial Management, Universiti Malaysia Pahang, Malaysia
  • Akrom Omonov Department of Banking, Tashkent Institute of Finance, Amir Temur Street, Tashkent, Uzbekistan

DOI:

https://doi.org/10.15282/jgi.5.1.2021.7061

Keywords:

Free cash flow, Agency cost, Firm performance, Malaysia

Abstract

This study intended to examine the relationship between free cash flow and agency costs towards firm performance based on the data from 350 public listed companies in Malaysia. The data was collected from year 2005 to 2015. There is a need to re-examine the free cash flow hypothesis and the agency theory based on Malaysian data as the results from previous studies shown a mix results.The findings shown free cash flow is significantly giving positive impact on firm performance. This result is contradict to free cash flow hypothesis, but it can occur due to, when the availability of investments opportunities that can be generated when firm more free cash flow that later able to increase firm performance. Meanwhile, total asset turnover has a positive impact on return on asset. However, the operating expenses ratio demonstrates that the operating expenses ratio has a negative impact on return on asset. The mix findings of agency cost are supported by previous studies.

Author Biography

Noraina Mazuin Sapuan, Faculty of Industrial Management, Universiti Malaysia Pahang, Malaysia

Dr Noraina Mazuin Sapuan is a Senior Lecturer in Faculty of Industrial Management, University Malaysia Pahang, Malaysia. She completed her undergraduate and Master degree at Universiti Kebangsaan Malaysia (UKM) majoring in Applied Economics and Public Policy and Islamic Economics, respectively. She graduated with Doctor of Philosophy (Economics) from Universiti Malaysia Terengganu (UMT) and had successfully been awarded Pro-Chancellor Award during the 15th Convocation Ceremony in 2016. She has enormous experiences in teaching at tertiary level as well as research and consultancy works. Her area of interests is in Applied Macroeconometrics, Financial Economics, Circular Economy - Sustainable Development Goals (Micro/Macro), Environmental Economics, Islamic Banking and Finance and Personal Financial Planning. With her experiences in research, she has secured numerous external and internal grants from public and private institutions. In addition, she also had won many awards in international and national conferences and research exhibitions. In terms of management experience, she has vast involvements in academic management at Higher Education Institution.  She has been appointed as a Senator at her former university for two consecutive cycles (2016-2020) and as the Head of Department for Accounting and Finance Department (2016-2020). With her experience and knowledge, she hopes to become an academician that contributes positively towards the expansion of knowledge in the field of economic, finance and sustainability management. 

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Published

2021-11-29

How to Cite

Sapuan, N. M., Abdul Wahab, N. ., Fauzi, M. A. ., & Omonov, A. . (2021). Analysing the Impacts of Free Cash Flow, Agency Cost and Firm Performance in Public Listed Companies in Malaysia. Journal of Governance and Integrity, 5(1), 211–218. https://doi.org/10.15282/jgi.5.1.2021.7061

Issue

Vol. 5 No. 1 (2021): Journal of Governance and Integrity

Section

JGI Vol. 5 Issue 1, December 2021

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Copyright (c) 2021 Noraina Mazuin Sapuan, Norwazli Abdul Wahab, Muhammad Ashraf Fauzi, Aktom Omonov

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This work is licensed under a Creative Commons Attribution 4.0 International License.

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