Accounting and Auditing Research

Accounting and Auditing Research

The Impact of Product Market Competition & Corporate Governance on Cash Holdings Policies in Companies Listed on The Tehran Stock Exchange

Document Type : Original Article

Authors
Mohammad Seirani
Hossein Seifgholi
10.22034/iaar.2014.104349
Abstract
In firms with weak governance mechanisms, there are incentives and opportunities for managers to use corporate resources to pursue their own interests. Meanwhile, the company's cash flow due to its high liquidity, the highest risk in terms of the use of improper actions by manager's expansion, providing rewards for taking adverse welfare benefits and other activities, the resources are wasted. The main purpose of the research, focusing on the level of competition in the product market as an indicator of corporate governance and its effect on cash held by managers of corporations have policies.
From 1385 to 1389, including five consecutive years of research and study sample consisted of 104 firms in Tehran Stock Exchange. The results show that the claims about the size of the board are true, and the mechanisms of institutional ownership and board independence, the expected results were not fulfilled. Overall, it seems that competition in the product market, strengthen supervision and control of the board members, has had a significant impact and it prevented from the accumulation of cash in the company.
Keywords
competition in product market
corporate governance
cash holdings
Accounting and Auditing Research
Volume 6, Issue 23
Autumn 2014
Pages 102-119