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

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. • We successfully replicate Hu et al. (2024) and find a significant year-end cash collection (YCC) premium in the U.S. market. • Australian firms exhibit negative YCC values across the entire size spectrum. • YCC premium in Australia exists only in equal-weighted portfolios.