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Allocation of Internally Generated Corporate Cash flow in Africa

Agyei-Boapeath, Henry; Machokoto, M

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Authors

Henry Agyei-Boapeath

M Machokoto



Abstract

We examine how managers of African firms, operating in environments characterised by less developed capital markets and weak institutional structures, make use of their internally generated cash flows. We find that managers of African firms hold most of their internally generated cash flows, and when they decide to spend, they allocate a higher proportion towards dividend payments; followed by leverage adjustments; then to investments; and lastly, to equity repurchases. These allocations are consistent with the existence of a significant financial constraint in African markets, and the use of dividends to signal credit quality in relatively underdeveloped capital markets.

Citation

Agyei-Boapeath, H., & Machokoto, M. (2018). Allocation of Internally Generated Corporate Cash flow in Africa. Journal of Accounting in Emerging Economies, 8(4), 495-513. https://doi.org/10.1108/JAEE-10-2017-0099

Journal Article Type Article
Acceptance Date Nov 5, 2018
Online Publication Date Nov 5, 2018
Publication Date Nov 5, 2018
Deposit Date Jul 1, 2021
Publicly Available Date Mar 28, 2024
Journal Journal of Accounting in Emerging Economies
Print ISSN 2042-1168
Publisher Emerald
Peer Reviewed Peer Reviewed
Volume 8
Issue 4
Pages 495-513
DOI https://doi.org/10.1108/JAEE-10-2017-0099
Keywords Financial constraints; cash flow; cash holdings; investments; dividend; Africa 2
Public URL https://nottingham-repository.worktribe.com/output/5750623
Publisher URL https://www.emerald.com/insight/content/doi/10.1108/JAEE-10-2017-0099/full/html
Additional Information Agyei-Boapeah, H. and Machokoto, M. (2018), "Allocation of internally generated corporate cash flow in Africa", Journal of Accounting in Emerging Economies, Vol. 8 No. 4, pp. 495-513. https://doi.org/10.1108/JAEE-10-2017-0099

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