Investigating the Relationship between Company Diversification and Systematic Risk by Studying the Cash flow of Companies Listed on the Tehran Stock Exchange

Subject Areas : Agriculture Marketing and Commercialization

Zahra Houshmand Negabi ¹ , Fatemeh Pirhayati ²

1 - Assistant Professor, Faculty Member at Islamic Azad University, Islamshahr Branch
2 - دانشگاه آزاد اسلامشهر

Received: 2024-05-27 Accepted : 2024-05-27 Published : 2024-04-16

Keywords: Corporate diversification, Cash flow, Systematic risk, Tehran Stock Exchange,

Abstract :

The main objective of this study is to investigate how cash flow and systematic risk can affect corporate diversification. When it comes to investment decisions and financial considerations in companies, diversification plays a crucial role. Studies indicated that corporate diversification influences employees’ productivity, cash retention, investment costs and overall company value. Diversification helps companies reduce risks when they encounter economic or market conditions. In other words, it assists companies in anticipating and preventing market changes and disruptions, thereby minimizing the impact of systematic risks. This research follows a descriptive and ex-post facto approach, categorized as cause and effect. The analysis of variables has been performed using multiple linear regression. Data from 118 companies between 2018 to 2022 were collected for research purposes. In order to analyze the data and test the hypotheses, Excel and EVIEWS software have been employed. The findings of this study indicate a relationship between systematic risk and corporate diversification. However, cash flow of companies and corporate diversification exhibited no significant correlation. Additionally, the results suggest that cash flow acts as a moderating variable that significantly influences the relationship between corporate diversification and systematic risk.

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