Allocation of Internally Generated Corporate Cash flow in Africa

Agyei-Boapeath, Henry; Machokoto, M

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: Jul 5, 2021
• 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