Relationship between free cash flow and dividend: Moderating role of firm size.

Abstract

In this study we want to examine the relationship between free cash flow and dividend in presence of a moderator firm size. Results indicate proxies of free cash flow have positive and highly statistically significant relationship with free cash flow. Second model of moderator showed results insignificant with relationship between FCF and dividend. In simple regression of free cash flow and dividend, results were also insignificant which also indicate that there is no relationship in these variables.  In our study we have used panel data analysis and to check the time and cross sectional effect, dummies has used. The results were highly statistically significant across the mostly companies and free cash flow but only two companies showing insignificant results. The results were insignificant across different periods. Our hypothesis was rejected under moderator but acceptable in fixed effect model.