Effect of Business Groups Affiliation on Cash Holdings and Return on Equity

Subject Areas : Financial Mathematics

Reza  Tehrani ¹ (Department of Financial Management, Faculty of Management, Tehran University, Tehran, Iran)
Roohallah  Ardakani ² (Department of Accounting, Mahalat Branch, Islamic Azad University, Mahalat, Iran)

Received: 2017-06-25 Accepted : 2017-12-02 Published : 2017-12-01

Keywords: Business group affiliation, Corporate cash holdings, Returns on equity,

Abstract :

Nowadays, business groups play an outstanding role in financial markets. Corporates in the trading groups are able to use technology, capital, human resources, productions and services of other members in the group in addition to their own resources and capabilities. Thus, this paper studies the effect of business group affiliation on cash holdings and return on equity. The sample involves 94 corporates among those accepted in Tehran Stock Exchange. In this research, the effect of business group affiliation on cash holdings and return on equity during 2010-2015 has been investigated; in total, it includes 564 observations for the research. Statistical method applied here is the multivariate regression in the data panel way. Results achieved by the research hypotheses indicate that there is a significant relationship between business group affiliation, cash holdings and return on equity.

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