The effect of free cash flow on the predictability of accounting conservatism towards stock repurchase opportunities of listed companies on the Stock Exchange of Thailand
Keywords:
Accounting Conservatism, Stock Repurchase, Free Cash FlowAbstract
The objectives of this research were to: 1. study the predictability of accounting conservatism towards the likelihood of company’s share repurchasing, and 2. study the influence of free cash flow on the predictability of accounting conservatism towards the likelihood of company’s share repurchasing. The data were gathered from 498 listed companies on the Stock Exchange of Thailand (SET) by using the Binary Logistic Regression method to prove the hypothesis.
The result revealed that the forecasting model of corporate buyback opportunities was statistically significant. The factors of business size, net profit, and dividend were able to statistically and significantly predict the likelihood of the company’s share repurchasing. However, accounting conservatism could not predict the likelihood of the company’s share repurchasing whether it was influenced by the company’s free cash flow or not. The results of this research had confirmed that the specific firm characteristics were able to predict the likelihood of company’s stock repurchasing. In contrast, the accounting conservatism and cash flow did not have any influences on the likelihood of company’s stock repurchasing on the Stock Exchange of Thailand, which would be benefits for investors to make decisions.
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