摘要：This paper examined the relationship between free cash flow and corporate profitability of Vietnamese listed firms.
Basing on the agency theory of free cash flow, several previous studies proposed a negative relationship between free
cash flow and corporate profitability. In this study, we argue that the presence of information asymmetry in the
financial market of developing economies may limit the access to external sources of finance. Thus, free cash flow
may serve as a cheaper alternative source of finance. This benefit may reduce, nullified, or even outweigh the agency
cost caused by excess free cash flow. The empirical analysis results basing on a sample of 208 Vietnamese listed nonfinancial
firms in the period from 2012 to 2016 showed that free cash flow seems to have a positive effect on the
corporate profitability of Vietnamese listed firms.
