aAssociate Professor, Department of Accounting, Mashhad Branch, Islamic Azad University, Mashhad, Iran
bM.A. Student of Accounting, Department of Accounting, Mashhad Branch, Islamic Azad University, Mashhad, Iran
Cash is an important and vital resource of every business unit. Holding too much cash can increase opportunity costs, while holding too little can induce shortage costs that disadvantage investment. This study attempts to expand our knowledge of factors affecting the corporate cash holdings under inflation, by considering both the economic cycle at the macro level, and the firm-specific operating cycle at the micro level. For this purpose the data of 125 firms listed in Tehran's Stock Exchange over the 2009–2013 period, the linear regression, and the panel data model are used. The results indicate that there is a U-shaped relationship between inflation and the firm's cash holdings level, while no significant correlation could be found between the firm's operating cycle and its cash holdings level.
Inflation, Cash holdings, Tehran's Stock Exchange
