The impact of cash holdings and debt financing of the sensitivity of investment to cash flow with an emphasis on financial constraints

Babaee Sadaghiyanie, Javad; Jabbarzadeh, Saeid

The impact of cash holdings and debt financing of the sensitivity of investment to cash flow with an emphasis on financial constraints

Document Type : Original Article

Authors

Javad Babaee Sadaghiyanie ¹

saeid jabbarzadeh ²

¹ Department of Accounting E-Campus, Islamic Azad University, Tehran,Iran

² Islamic Azad University, Urmia Branch

Abstract

The purpose of this study is to investigate The impact of cash holdings and debt financing on investment-cash flow sensitivity with emphasis on financial constraint in listed companies on Tehran Stock Exchange. In order to achieve this purpose, a sample of 110 firms of listed companies in Tehran Stock Exchange during the period from 2008 to 2015 were selected. To test the hypothesis analysis of linear regression technique with pooled method was used.

The research findings show that, there is between cash flow and investment significant positive relationship. And companies with financial constraints compared to companies without financial constraints, have more cash flow sensitivity. The results also show that there is cash holdings and investment-cash flow sensitivity negative and significant relationship. And there is cash holdings and investment-cash flow sensitivity in companies with financial constraints negative and significant relationship. But, there is cash holdings and investment-cash flow sensitivity in companies without financial constraints negative and non-significant relationship. Finally, research findings show that, there is between debt financing and investment-cash flow sensitivity significant and positive relationship.

Keywords

Investment-cash flow sensitivity

cash holdings

Financial Constraints

financing debt