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 More
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.
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According to the agency conflicts hypothesis, managers' ability to distort and hide information depends on the degree of complexity of the organization. Companies with complex organizational environments and more agency problems have high diversification compared to oth More
According to the agency conflicts hypothesis, managers' ability to distort and hide information depends on the degree of complexity of the organization. Companies with complex organizational environments and more agency problems have high diversification compared to other companies. However, mechanisms are needed to control the opportunistic behavior of managers. Therefore, the purpose of this study is to investigate the impact of corporate governance on corporate diversification, emphasizing the lack of profit transparency in companies listed on the Tehran Stock Exchange. In this regard, 110 companies were selected for the period of 2016-2021. The purpose of applied research and its methodology is post-event type. The combined data approach has been used to test the research hypotheses. Eviews statistical software was used to test research hypotheses. The results showed that the use of corporate governance mechanisms limits managers' motivation to diversify. On the other hand, when profit opacity is high, corporate governance mechanisms are not capable enough to limit the incentive of corporate diversification.
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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 corpo More
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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