Abstract:

In this study, the purpose is to investigate the impact of free cash flow (FCF) on firm’s performance by looking at different industry as the moderator variable in Malaysia for the period 2008 to 2012. Firm performance is such as operating performance, firm value and stock return as the dependent variables. All the dependent variable are tested and observed as whether they have any impact on the FCF as the independent variables. The firm performance are measured by the company’s accounting performance which measured by return on assets (ROA) and return on equity (ROE), firm value is measured by Tobin’s Q and the stock return measure by stock
price. Size of the company and the debt ratio however, served as the control variable.
The data collected are divided into five different industries which are finance, plantation, industrial products, properties and consumer goods. This study utilizes panel data regression for testing the hypothesis and the results indicated that some do not support the entire hypothesis as suggested. The findings point out that FCF as the independent variables has related significantly negative relationship with that firm’s performance, measured by ROA and Tobin Q. Besides that, there is positively insignificant relationship between ROE and stock return on FCF.