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Modelling The Influence Of Cash Flow On Indebtedness Of Croatian Companies Using Linear Regression Model

Author

Listed:
  • Anita Ceh Casni

    (Faculty of Economics and Business, Zagreb)

  • Josipa Filic

    (Faculty of Economics and Business, Zagreb)

Abstract

The aim of this paper is to examine the statistical relationship between cash flow and corporate debt using multiple linear regression model. In addition to cash flow, the size of the enterprise was used as an additional explanatory variable in the model. Since there is a great deal of research in the relevant literature on the relationship between profit and debt, this paper uses cash flow instead of profit, which is a contribution to the existing literature. The results of the regression analysis indicate a negative impact of cash flow on indebtedness, which also confirms packing order theory. In addition, the results show a positive (albeit weaker) impact of corporate size on debt.

Suggested Citation

  • Anita Ceh Casni & Josipa Filic, 2019. "Modelling The Influence Of Cash Flow On Indebtedness Of Croatian Companies Using Linear Regression Model," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 28(2), pages 485-498, december.
    • Handle: RePEc:avo:emipdu:v:28:y:2019:i:2:p:485-498
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    File URL: https://hrcak.srce.hr/clanak/335119
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    Citations

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    Cited by:

    1. Katarina Valaskova & Tomas Kliestik & Dominika Gajdosikova, 2021. "Distinctive determinants of financial indebtedness: evidence from Slovak and Czech enterprises," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(3), pages 639-659, September.

    More about this item

    Keywords

    multiple linear regression model; cash flow; indebtedness; firm size;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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