Pages: 58-63

Abstract

The goal of this investigation is to examine the impact of free cash flow on products diversification of the listed companies in Tehran stock exchange. The locative domain of the research includes all listed companies in Tehran stock exchange and the time domain is during between 2010 to 2013. This investigation is a kind of applied and quantitative research. Lehn & Poulsen model (1989) is used to measure free cash flows, and Vinktash & chiang (1986) is provided a model to calculate information asymmetry. 336 firms were selected based on the systematic elimination method as the statistical population and 79 firms were finally selected regarding DeMorgan table. The results suggested that there is a free cash flow significantly impact on products diversification of the listed companies in Tehran stock exchange.