Investigating the effect of corporate diversification on cash retention in companies listed on the Tehran Stock Exchange
Subject Areas : Agriculture Marketing and Commercialization
1 - Master of Accounting, Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran
Keywords: Corporate diversification, Commercial diversification, Geographical diversification, Cash retention.,
Abstract :
This study was an attempt to investigate the effect of corporate diversification on cash retention. Diversification is a risk management method that combines different types of investments. Diversification is a model for developing a company by offering diverse products and services. This study is experimental and fundamental in terms of its purpose and correlational in terms of its nature. The study data were extracted from the observed values of eighty-nine stock companies during ten years from 2002 to 2021. The collected information is company-year and the purpose of the study is to test the effect of independent variables on the dependent variable to investigate the effect of corporate diversification on cash retention in companies listed on the Tehran Stock Exchange. According to the collected information and using the combined model of regression analysis, three models were fitted and three hypotheses were tested. The results obtained from the investigated models support the inverse effect of corporate diversification indices including commercial diversification index, commercial diversification dummy variable, and geographical diversification dummy variable on cash retention. A dummy variable is referred to as an indicator of technological changes at a certain point in time. However, the results did not support the effect of the geographic diversification index on cash retention.
_ Norbakhsh H. & Seifodini J. & Movafaghi M. (2022). Investigating social responsibility effectiveness in net profit of manufacturing companies listed on the Tehran Stock Exchange. Agricultural Marketing and Commercialization Journal, 6(1): 83-98.
_ Khodadad Hatkeposhti F. (2021). Evaluating the Effects of the Audit Committee's Characteristics on Voluntarily Disclosure of Information in Tehran Agricultural Stock Exchange. Agricultural Marketing and Commercialization Journal, 5(2): 62-74.
_ Jani E. & Hoesli M. & Bender AWD. (2004). “Corporate cash holdings and agency conflicts”, available at: www.ssrn.com,id=563863
_ Lin, X. (2023). The disciplinary role of product market competition on cash holding. International Review of Economics & Finance, 83(1): 653-671.
_ Mir H. & Zaraatgari R. & Sotoudeh R. (2021). Improving the Food and Agriculture Sector Tehran Stock Exchange by using Artificial Intelligence. Agricultural Marketing and Commercialization Journal, 5(2): 90-114.
_ Farham V. & Shafiee H. & Sheybani Tazaroji A. (2021). Modeling the Causes of Business Failure Using Audit Variables: an Interpretive Structural Approach (a case study of agricultural firms in the Tehran Stock Exchange). Agricultural Marketing and Commercialization Journal, 5(1): 19-36.
_ Luo H. & Wang H. & Wu Y. (2023). Advertising and corporate cash holdings. Finance Research Letters, 58(1): 104475-104487.
_ Drobetz, W. & Grüninger MC. & Hirschvogl S. (2010). Information asymmetry and the value of cash. Journal of banking & finance, 34(9): 2168-2184.
_ Jensen MC. & Meckling WH. (2019). Theory of the firm: Managerial behavior, agency costs and ownership structure. In Corporate governance Gower, 2(1): 77-132.
_ Thomas S. (2002). Firm diversification and asymmetric information: evidence from analysts’ forecasts and earnings announcements. Journal of Financial Economics, 64(3): 373-396.
_ Gitman LJ. (1974). estimating corporate liquidity requirements: a simplified approach. Financial Review, 9(1): 79-88.
_ Doaei M. & Ahmad Anuar M. & Ismail Z. (2015). Corporate diversification and efficiency of manufacturing firms listed in Bursa Malaysia. Iranian Journal of Management Studies, 8(4): 523-544.
_ Dust H. & Dadbeh F. & Hashemloo F. (2014). Corporate diversification, information asymmetry and firm performance: Evidence from Tehran Stock Exchange. Management Science Letters, 4(2): 315-324.
_ Anderson RC. & Bates TW. & Bizjak JM. & Lemmon ML. (2009). Corporate governance and firm diversification. Financial management, 6(1): 5-22.
_ Noravesh I. & Dadbeh F. (2013). A Study on effects of corporate diversification on information asymmetry and Firm Value. Evidence from Tehran Stock Exchange. International Journal of Management and Humanity Sciences, 26(2): 480-490.
_ Rahmanian Koushkaki A. & Nazari F. (2023). Investigating the Relationship between Cash Retention and Investment Efficiency in Companies in Financial Crisis Considering the Role of Corporate Governance. Monetary & Financial Economics, 30(26): 12-18.
_ Bhaduri SN. (2005). Investment, financial constraints and financial liberalization: Some stylized facts from a developing economy, India. Journal of Asian economics, 16(4): 704-718.
_ Maheshwari Y. & Rao KV. (2017). Determinants of corporate cash holdings. Global Business Review, 18(2): 416-427.
_ Yaghoobnezhad A. & Rahnamaie Roodposhti F. & Zabihi A. (2011). The Effect of Corporate Governance Mechanisms on Stock Liquidity in Tehran Stock Exchange. Journal of Securities Exchange, 4(13): 157-173.
_ Ebrahimi Sarveolia MH. & Jahanshahi J. (2016). Survey on Relationship between Intellectual Capital and Variables Influencing on Investors Decision of the Companies Listed in Tehran Stock Exchange. Empirical Studies in Financial Accounting, 13(49): 53-81.
_ Rasaiian A. & Rahimi F. & Hanjari S. (2011). The Effect of Internal Mechanisms of Corporate Governance on the Level of Cash holdings in Tehran Stock Exchange. Financial Accounting Research, 2(4): 125-144.
_ Mir H. & Zaraatgari R. & Sotoudeh R. (2021). Comparison of Risk Factors for Investing in Tehran Stock Exchange Using Smart Neural Network (Forecasting Tehran Stock Exchange with Neural Networks). Agricultural Marketing and Commercialization Journal, 5(1): 43-57.
_ Anderson RC. & Bates TW. & Bizjak JM. & Lemmon ML. (2000). Corporate Governance and Firm Diversification. Financial Management, 29(1): 5-22.