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1、本科毕业论文（设计）外 文 翻 译原文：Over-investment of free cash flowThis paper examines firm investing decisions in the presence of free cash flow. In theory, firm level investment should not be related to internally generated cash flows (Modigliani & Miller, 1958). However, prior research has documented a positiv
2、e relation between investment expenditure and cash flow (e.g., Hubbard, 1998). There are two interpretations for this positive relation. First, the positive relation is a manifestation of an agency problem, where managers in firms with free cash flow engage in wasteful expenditure (e.g.,Jensen 1986;
3、 Stulz 1990). When managers objectives differ from those of shareholders, the presence of internally generated cash flow in excess of that required to maintain existing assets in place and finance new positive NPV projects creates the potential for those funds to be squandered. Second, the positive
4、relation reflects capital market imperfections, where costly external financing creates the potential for internally generated cash flows to expand the feasible investment opportunity set (e.g., Fazzari, Hubbard, & Petersen,1988; Hubbard, 1998).This paper focuses on utilizing accounting information
5、to better measure the constructs of free cash flow and over-investment, thereby allowing a more powerful test of the agency-based explanation for why firm level investment is related to internally generated cash flows. In doing so, this paper is the first to offer large sample evidence of over-inves
6、tment of free cash flow. Prior research, such as Blanchard, Lopez-di-Silanes, and Vishny (1994), document excessive investment and acquisition activity for eleven firms that experience a large cash windfall due to a legal settlement, Harford (1999) finds using a sample of 487 takeover bids, that cas
7、h-rich firms are more likely to make acquisitions that subsequently experience abnormal declines in operating performance, and Bates (2005) finds for a sample of 400 subsidiary sales from 1990 to 1998 that firms who retain cash tend to invest more, relative to industry peers. This paper extends thes
8、e small sample findings by showing that over-investment of free cash flow is a systematic phenomenon across all types of investment expenditure.The empirical analysis proceeds in two stages. First, the paper uses an accounting-based framework to measure both free cash flow and over-investment. Free
9、cash flow is defined as cash flow beyond what is necessary to maintain assets in place and to finance expected new investments. Over-investment is defined as investment expenditure beyond that required to maintain assets in place and to finance expected new investments in positive NPV projects. To m
10、easure over-investment, I decompose total investment expenditure into two components: (i) required investment expenditure to maintain assets in place, and (ii) new investment expenditure. I then decompose new investment expenditure into over-investment in negative NPV projects and expected investmen
11、t expenditure, where the latter varies with the firms growth opportunities, financing constraints, industry affiliation and other factors.Under the agency cost explanation, management has the potential to squander free cash flow only when free cash flow is positive. At the other end of the spectrum,
12、 firms with negative free cash flow can only squander cash if they are able to raise cheap capital. This is less likely to occur because these firms need to be able to raise financing and thereby place themselves under the scrutiny of external markets (DeAngelo, & Stulz, 2004; Jensen, 1986). Consist
13、ent with the agency cost explanation, I find a positive association between over-investment and free cash flow for firms with positive free cash flow. For a sample of 58,053 firm-years during the period 19882002, I find that for firms with positive free cash flow the average firm over-invests 20% of
14、 its free cash flow. Furthermore, I document that the majority of free cash flow is retained in the form of financial assets. The average firm in my sample retains 41% of its free cash flow as either cash or marketable securities. There is little evidence that free cash flow is distributed to extern
15、al debt holders or shareholders.Finding an association between over-investment and free cash flow is consistent with recent research documenting poor future performance following firm level investment activity. For example, Titman, Wei, and Xie (2004) and Fairfield, Whisenant, and Yohn (2003) show t
16、hat firms with extensive capital investment activity and growth in net operating assets respectively, experience inferior future stock returns. Furthermore, Dechow, Richardson, and Sloan(2005) find that cash flows retained within the firm (either capitalized through accruals or invested in financial
17、 assets) are associated with lower future operating performance and future stock returns. This performance relation is consistent with the over-investment of free cash flows documented in this paper.The second set of empirical analyses examine whether governance structures are effective in mitigatin
18、g over-investment. Prior research has examined the impact of a variety of governance structures on firm valuation and the quality of managerial decision making. Collectively, the ability of cross-sectional variation in governance structures to explain firm value and/or firm decision making is relati
19、vely weak. Consistent with this, I find evidence that out of a large set of governance measures only a few are related to over-investment. For example, firms with activist shareholders and certain anti-takeover provisions are less likely to over-invest their free cash flow.The next section develops
20、testable hypotheses concerning the relation between free cash flow and over-investment. Section 2 describes the sample selection and variable measurement. Section discusses empirical results for the over-investment of free cash flow. Section 4 contains empirical analysis examining the link between c
21、orporate governance and the over-investment of free cash flow, while section 5 concludes.1. Free cash flow and over-investmentThis section describes in detail the various theories supporting a positive relation between investment expenditure and cash flow and then develops measures of free cash flow
22、 and over-investment that can be used to test the agency based explanation. Explanations for a positive relation between investment expenditure and cash flowIn a world of perfect capital markets there would be no association between firm level investing activities and internally generated cash flows
23、. If a firm needed additional cash to finance an investment activity it would simply raise that cash from external capital markets. If the firm had excess cash beyond that needed to fund available positive NPV projects (including options on future investment) it would distribute free cash flow to ex
24、ternal markets. Firms do not, however, operate in such a world. There are a variety of capital market frictions that impede the ability of management to raise cash from external capital markets. In addition, there are significant transaction costs associated with monitoring management to ensure that
25、 free cash flow is indeed distributed to external capital markets. In equilibrium, these capital market frictions can serve as a support for a positive association between firm investing activities and internally generated cash flow.The agency cost explanation introduced by Jensen (1986) and Stulz (
26、1990) suggests that monitoring difficulty creates the potential for management to spend internally generated cash flow on projects that are beneficial from a management perspective but costly from a shareholder perspective (the free cash flow hypothesis). Several papers have investigated the implica
27、tions of the free cash flow hypothesis on firm investment activity. For example, Lamont (1997) and Berger and Hann (2003) find evidence consistent with cash rich segments cross-subsidizing more poorly performing segments in diversified firms. However, the evidence in these papers could also be consi
28、stent with market frictions inhibiting the ability of the firm to raise capital externally and not necessarily an indication of over-investment. Related evidence can also be found in Harford (1999) and Opler, Pinkowitz, Stulz, and Williamson (1999, 2001). Harford uses a sample of 487 takeover bids t
29、o document that cash rich firms are more likely to make acquisitions and these cash rich acquisitions are followed by abnormal declines in operating performance. Opler et al. (1999) find some evidence that companies with excess cash(measured using balance sheet cash information) have higher capital
30、expenditures, and spend more on acquisitions, even when they appear to have poor investment opportunities (as measured by Tobins Q). Perhaps the most direct evidence on the over-investment of free cash flow is the analysis in Blanchard et al. (1994). They find that eleven firms with windfall legal s
31、ettlements appear to engage in wasteful expenditure.Collectively, prior research is suggestive of an agency-based explanation supporting the positive relation between investment and internally generated cash flow. However, these papers are based on relatively small samples and do not measure over-in
32、vestment or free cash flow directly. Thus, the findings of earlier work may not be generalizable to larger samples nor is it directly attributable to the agency cost explanation. More generally, a criticism of the literature examining the relation between investment and cash flow is that finding a p
33、ositive association may merely indicate that cash flows serve as an effective proxy for investment opportunities. My aim is to better measure the constructs of free cash flow and over-investment by incorporating an accounting-based measure of growth opportunities, and test whether the relation is ev
34、ident in a large sample of firms.In addition to prior empirical work on agency based explanations for the link between firm level investment and internally generated free cash flow, there exists a stream of research dedicated to examining the role of financing constraints (e.g., Fazzari et al. (1988
35、), Hoshi, Kashyap, and Scharfstein (1991), Fazzari and Petersen (1993), Whited (1992) and Hubbard (1998). Myers and Majluf (1984) suggest that information asymmetries increase the cost of capital for firms forced to raise external finance, thereby reducing the feasible investment. Thus, in the prese
36、nce of internally generated cash flow, such firms will invest more in response to the lower cost of capital.Some early work in this area examined the sensitivity of investment to cash flow for high versus low dividend paying firms (Fazzari et al., 1988), comparing differing organizational structures
37、 where the ability to raise external financing was easier/harder (Hoshi, Kashyap and Scharfstein, 1991, with Japanese keiretsu firms) and debt constraints (Whited, 1992). These papers find evidence of greater sensitivity of investment to cash flow for sets of firms which appeared to be financially c
38、onstrained (e.g., low dividend paying firms, high debt firms and firms with limited access to banks). However, more recent research casts doubt on the earlier results. Specifically, Kaplan and Zingales (1997, 2000), find that the sensitivity of investment to cash flow persists even for firms who do
39、not face financing constraints. They construct a measure of ex ante financing constraints for a small sample of firms and find that the sensitivity of investment to cash flow for firms is negatively associated with this measure, thereby casting doubt on the financing constraint hypothesis. includes
40、a variety of measures designed to capture financing constraints.1.2. Primary hypothesisAs described in the earlier section, in a world of perfect capital markets (no frictions for raising external finance, no information asymmetries and associated moral hazard problems, no taxes etc.), there should
41、be no association between firm level investment and internally generated cash flows. However, when it is costly for external capital providers to monitor management, and it is costly for the firm to raise external finance, an association is expected. Specifically, there should be a positive relation
42、 between firm level investment expenditure and internally generated cash flows.This relation, however, could be due to several factors. It could reflect management engaging in additional investment on self-serving projects rather than distribute the cash to shareholders. Such decisions can include:
43、(i) empire building (see e.g., Shleifer & Vishny, 1997), (ii) perquisite consumption (Jensen & Meckling, 1976), (iii) diversifying acquisitions (e.g., Morck, Shleifer, & Vishny, 1990), and (iv) subsidizing poorly performing divisions using the cash generated from successful ones instead of returning
44、 the cash to shareholders (e.g., Berger and Hann, 2003; Jensen & Meckling, 1976; Lamont, 1997). Alternatively, it could reflect the increased investment opportunity set from (relatively less costly) internal financing sources.To focus on the agency-based explanation, the next section builds an inves
45、tment expectation model that captures firm specific growth opportunities and measures of financing constraints. Firms with positive residuals from this expectation model are likely to be over investing. The empirical tests focus on this group of firms and examine whether over-investment is related t
46、o available free cash flow at the time those investments were made.Source: Scott Richardson,2006 .“Over-investment of free cash flow”. Rev Acc Stud. November.pp.159-189.译文：过度投资的自由现金流量这篇论文探讨了在自由现金流量下企业的投资决策。从理论上来说，企业投资水平不应与内部自由现金流量有关系（莫迪利亚尼和米勒，1958年）。但是，以前的研究已经证明投资支出与自由现金流量存在正相关的关系（例如，哈伯德，1998年）。对这种正
47、相关的关系有两种解释。首先，这种正相关的关系是代理问题的一个表现，那些拥有自由现金流量的公司经理浪费了开支（例如，詹森，1986；斯图尔兹，1990）。当经理的目标与那些股东不同，在内部的存在产生自由现金流量超过那些需要保持现有资产的地方，新的明确的净现值规划创造的这些潜在的资金可能被浪费掉。第二，这种正相关的关系反映资本市场的不完全，昂贵的外部融资创造了内部潜在的自由现金流量，以扩大潜在的可行的投资机会集（例如，法兹泽瑞，哈伯德和彼得森，1988；哈伯德，1998）。本文重点介绍利用会计信息更好地衡量自由现金流量和过度投资，从而允许对代理理论解释坚定的投资水平与内部自由现金流量有关联的原因做
48、了更强大的测试。这样做，本文是第一个提供大量样本证明过度投资的自由现金流量。在此之前的研究，如布兰查德，洛佩兹迪赛伦兹和魏施尼（1994），记录了由于暴利引发的法律纠纷的11家公司的过度投资和获得大量现金流量的经验，哈福德（1999）发现使用收购出价的487个样本，即现金充裕的公司更可能进行收购，随后经历经营业绩的异常下降，贝茨（2005）发现了1990年至1998年400个销售子公司的样品，那些保留现金的企业相对于业界同行更倾向于投资。本文通过这些小样本发现自由现金流量的过度投资是所有类型投资支出的系统现象。在两个阶段的实证分析收益。首先，本文采用的会计为基础的框架来衡量自由现金流量和过度投
49、资。自由现金流量被定义为那些在适当位置超出维持公司经营必要的资产和为预计的新的投资供给资金的现金流量。过度投资被定义为投资花费超出必须在适当位置保持资产和为预计为资金净现值为正的项目上投入资金的需要。为了估计过度投资，笔者将总投资分解成两个部分：（1）为了在适当位置保持资产而需要的投资开支，（2）新的投资开支。然后将新的投资支出分解成产生负的净现值方案的过度投资和期望的投资支出，其中后者因公司的成长机会，融资约束，行业隶属和其他因素而各不相同。根据代理成本的解释，管理层有可能在自由现金流量为正时，浪费自由现金流量。在范围的另一端，如果能够筹集到“便宜”的资金，拥有负的自由现金流量的企业只能浪费现金。这是不太可能发生的，因为这些企业需要能够筹融资，从而将他们自己置于外部市场的监督之下（迪安杰罗，斯图而兹，2004；詹森，1986）。与代理成本的解释相一致，我找到了一个企业过度投资和对企业的自由现金流量呈正相关的确定的关系。如58053事务所1988-2002年期间的样本，我发现，自由现金流量为正的公司比一般公司过度投资20%的自由现金流量。此外，我发现自由现金流量大多以金融资产的形式保留。在我的样本中平均有41%的公司