The effect of capital structure and operating cycles on the relationship between comparability of financial statements and holding cash

Subject Areas : Journal of Capital Market Analysis

Mohammadreza Mehrabanpour ¹ , Farzin Rezaei ² , Maryam Moradi ³ , Leila Moradi ⁴

1 - Department of Accounting and Finance, Faculty of management and accounting, University of Tehran, Farabi Campus
2 - Associate Professor of Accounting, Faculty Member of Accounting Department, Qazvin Branch of Azad University, Faculty of Management and Accounting
3 - PhD student in Accounting, Islamic Azad University. Tehran center Branch, Tehran, Iran.
4 - Master of Accounting student, Allameh Tabatabai University, Tehran, Iran.

Received: 2021-08-20 Accepted : 2021-09-22 Published : 2021-08-23

Keywords: Capital Structure, Comparison of Financial Statements, Cash Maintenance, Operational Cycles,

Abstract :

Increasing the comparability of financial statements leads to lower agency costs and the need to keep cash. In this regard, the aim of this study was to investigate the relationship between comparability of financial statements and cash retention and the effect of capital structure and operational cycles on the relationship between comparability of financial statements and retention of cash. To achieve the objectives of the study, the data of companies listed on the Tehran Stock Exchange in the period 2014 to 2018 were tested using multiple linear regressions using panel data. The findings show that increasing the comparability of financial statements significantly reduces the retention of corporate cash. Evidence also suggests that there is no significant effect of capital structure and operational cycles on the relationship between the comparability of financial statements and the retention of cash. The results show that investors and creditors in their economic decisions rely on the financial statements of companies, so it is worthwhile to standardize and monitor institutions as well as the company's governing bodies. . They attach special importance to the ability to compare financial information.