Some researchers have argued that the existence of free cash flow can lead managers in a firm

Question:

Some researchers have argued that the existence of can lead managers in a firm to make inappropriate acquisition decisions. To avoid these problems, these authors have argued that firms should increase their debt-to-equity ratio and “soak up” through interest and principal payments. Is a significant problem for many firms?

Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...