One of the criteria for evaluating performance and assessing the financial health of the business units is free cash flow (FCF), that for first introduced by Jensen. Free cash flow can be having important and useful applications for business managers and shareholders.  An important issue about the free cash flow is the agency problems of free cash flow. According to Jensen research managers in firms with high free cash flows and low growth likely to maintain their interest turn to earning management .Several studies that performed after Jensen research in this field also confirmed earning management in such firms .In this paper, mentioned the definition of free cash flows have been made ​​by the individuals. And the importance and application of free cash flows to shareholders, investors and business executives are examined. And continually several portion about the free cash flows to be expressed. Finally, the role of free cash flow as a stimulus for earnings management in business and the factors that according to research findings can be considered to offset this incentive are examined.