Financial Leverage, Cash Holdings and Firm Value in the Companies Listed in Tehran Stock Exchange: Investigating Non-linear and Hierarchical Relationships

Subject Areas : Management Accounting

اسماعیل توکل نیا ¹ , مهدی تیرگری ²

1 - مسئول مکاتبات
2 - ندارد

Received: 2014-04-09 Accepted : 2014-07-21 Published : 2014-10-12

Keywords: financial leverage, cash holdings, Firm Value, Curvilinear Relationship, Hierarchical Relationship,

Abstract :

In the recent years there has been a growing interest in corporate cash holdings in thefinance literature. This interest has been especially motivated by the fact that corporationshold significant amounts of cash in their balance sheets. The main purpose of this study is toexamine the curvilinear relationship between financial leverage and corporate cash holdings.Also, this study examines the curvilinear relationship between cash holdings and firm value.The sample of this study, includes 105 companies listed in the Tehran Stock Exchange duringthe period 1386-1390 and for processing and testing hypotheses, regression method is used.Study findings support the U-shaped relationship between financial leverage and corporatecash holdings and between corporate cash holdings and firm value.