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Financial constraints, cash flow timing patterns, and asset prices in the australian market

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  • Mo, Di
  • Tian, Xiao
  • Zhong, Angel

Abstract

This study investigates the year-end cash collection (YCC) premium in the Australian equity market. When replicating the main results reported in Hu et al. (2024), we find that while Australian firms exhibit fiscal year-end cash flow concentration patterns similar to their U.S. counterparts, the YCC premium exists only in equal-weighted portfolios and disappears entirely in value-weighted portfolios. This contrasts with U.S. markets, where the premium persists regardless of portfolio weighting. Australian firms display distinctively negative YCC values and lower profitability across all size quintiles compared to U.S. firms, indicating different dynamics in how financial constraints relate to asset prices. Our findings reveal that the YCC effect is contingent on market microstructure and institutional frameworks, challenging the universal applicability of U.S.-centric asset pricing models.

Suggested Citation

  • Mo, Di & Tian, Xiao & Zhong, Angel, 2025. "Financial constraints, cash flow timing patterns, and asset prices in the australian market," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25002446
    DOI: 10.1016/j.pacfin.2025.102907
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    Keywords

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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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