Impact of Financial Leverage on Agency cost of Free Cash Flow in Firms Accepted in Tehran Stock Exchange

Investors and creditors tend to invest in firms that have high free cash flow, because is one of the tools evaluation of debt repayment and determination financial flexibility, is index of free cash flow .But the important problem about free cash flow is considered, the funds are agency problems . In this research, a main hypothesis and sub-hypothesis, by selecting the 74 firm from between firms listed on the Tehran Stock Exchange for a period of 5 years 2006-2011, the Panel method have been tested. The results show between agency costs of free cash flow and financial leverage, debt to equity Ratio and long-term debt ratio there was a significant negative relationship. Findings from the research side also show there was a significant positive relationship between agency costs of free cash flow with profitability, firm size, Q-Tobin ratio