راهبرد مدیریت مالی (Jun 2015)
The Investigation of the Effect of Control Mechanisms of Corporate Governance on the Level of Cash Flow Holdings in Tehran Stock Exchange
Abstract
This study aimed to investigate the effect of control mechanisms of corporate governance on cash holdings in companies listed in Tehran Stock Exchange. Given the development of companies and the introduction of representation theory and increased duties and authorities of the board, a question has been raised more seriously how managers who are not actually the owners of the company pursue the interests of shareholders.Considering unlimited powers delegated by the owners to the board, attention given to corporate governance has increased dramatically. Corporate governance is a set of control mechanisms within the company and outside the company that makes an appropriate balance between the equity and the needs and authority of the board. Finally, these mechanisms make the shareholders, fund suppliers and other interested groups sure that investment will be back with reasonable profits and their interests will be considered. To test the hypotheses, a sample of companies listed inTehran Stock Exchange during 2005 to 2012 has been selected. To see the effect of corporate governance on the level of cash holdings, multivariate regression model was used. For this purpose, 90 companies were chosen ad analyzed for the study. 9 criteria were used to calculate the corporate governance and the effect of the 9 criteria was tested using the software of Stata11. The results showed that the corporate governance has a positive effecton cash holdings. Among the 9 criteria, the dichotomy duties of the President of the Board & CEO, the percentage of non-responsibility, the opinion of the auditor, the change of the auditor and the independency of audit organization had no significant effect on the level of cash holdings. The rate of benefits received, however, had a negative effect while the size of Board of Directors, the percentage of institutional ownership and reliance on debt had a positive effect.
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