An investigation into the impact of ownership structure on the level of cash holdings in the companies accepted in Tehran Stock Exchange Market

Abstract

Liquidity of a company is the ability to meet cash commitments before the deadline. Selecting from cash spending or cash holdings by the managers is of great importance for the owners of the company. Various factors can be effective in determining the level of company’s liquidity. Ownership structure of companies is one of these factors which may lead to companies’ behavioral change. This change is derived from monitoring activities by different investors in this structure. This study was an attempt to assess the impact of ownership structure on the level of companies’ cash holdings in creating appropriate ownership in connection with creating the level of cash holdings. In this study, ownership structure has been categorized into four types of institutional ownership, managerial ownership, corporate ownership, and foreign ownership. In this regard, the impact of institutional, managerial, corporate, and foreign variables on the level of cash holdings has been investigated. For every category of ownership, a hypothesis was proposed and its impact on the level of cash holdings was tested. The statistical sample of the research included 96 companies from 2004 to 2013. The statistical method of testing the hypotheses in this study was multiple regressions through panel data. The findings revealed a significant relationship between institutional, managerial, and foreign ownership and the level of cash holdings; however, there was no significant relationship between corporate ownership of the company and the level of cash holdings.