The association between excess Cash holding and shareholder value: The case of Tehran security exchange

Subject Areas : Journal of Investment Knowledge

Nezamoldin Rahimian ¹ , Mahmoud Ghorbani ² , Keyvan Shabani Shabani ³

1 - Assistant Professor of Khatam Accounting College Studs
2 - PhD Student of Accounting, Tehran University
3 - Master of Accounting , Shahid Beheshti University

Received: 2013-12-27 Accepted : 2014-05-14 Published : 2014-05-14

Keywords: Cash holding, Shareholder value, Marginal value of cash,

Abstract :

Cash is one of the most crucial resources in every enterprise and making a balance between available cash and its requirements is the most important criteria for safety economic in every entity. All the companies that have enough cash for their operation and those that hold cash more than their need, have some troubles. So in this study the elements that may have influence on cash holding and the association between persistent excess cash holding on the Tehran security exchange were examined for achieving this target. Regard to existing constraints. 73 companies for a seven years period (1384-1390) were selected as sample. With respect to the data, fixed effect regression was used. Our result show that there is a positive and significant association between firm size, net working capital, operating cash flows and financing cash flows with cash holding and variables such as leverage, growth option, variability of cash flows, close cash substitutes and level of investment opportunities have no significant relationship with cash holding. Furthermore the results of second part of this research shows that excess cash holing in both form of transitory and persistent have no influence on shareholder value.