Is Free Cash Flow Value Relevant? The Case of the U.S. Consumer Discretionary Sector
This study attempts to determine whether free cash flow (FCF)is value relevant for the U.S. Consumer Discretionary sector, and which FCF is the most value relevant. The results would help retail investors makebetter decisions, and may encourage accounting standards setters to require Consumer Discretionary sector companies to use a specific definition of FCF to enhance comparability. Using a sample of 11,640 observations covering the period from1988 to 2012, the study shows that FCF is not value relevant for the Consumer Discretionary sector. This result is in agreement with some prior research discussed in the literature review.
In this article,we use the Fourier flexible functional form to analyze the efficiency changes of 12 share-holding commercial banks whose branches are expanding quickly.We find that,the fast increase of the numbers and the average scales of bank branches both have significantly positive effects on bank cost efficiencies.During 2000 to 2005,the cost efficiency of the 12 banks as a whole increased in a fluctuant way,and there is a relatively big increase of the efficiency in the latter half of the period compared to the former half.