Free cashflow and firm performance: Evidence from sectoral levels for Vietnamese listed firms

Abstract

Using data of listedfirms on Hochiminh Stock Exchange, the study examines the impact of free cashflowson firm performance of manufacture, trade and real estates sectors. The findingsconsistently show that free cashflowshave a positive effect on firm performance for all sectors. However, the impact of free cashflows on firm performanceis different between firms with and without investment opportunities. This shows the relevance of Jensen’s free-cashflows theory (1986) to listed Vietnamese firms at thesectoral level.