Allocation of internally generated corporate cash flow in Africa

Henry Agyei-Boapeah, Michael Machokoto

Research output: Contribution to JournalArticlepeer-review


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.
Original languageEnglish
Article numberJAEE-10-2017-0099
Pages (from-to)495-513
Number of pages19
JournalJournal of Accounting in Emerging Economies
Issue number4
Publication statusPublished - 1 Aug 2018


  • Financial constraints
  • cash flow
  • cash holdings
  • investments
  • dividend
  • Africa


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