Investigating the Impact of Political Uncertainty on Cash Holdings

Document Type : Research Paper

Authors

1 Assistant Professor of Accounting, Islamic Azad University, North Tehran Branch, Tehran, Iran.

2 Assistant Professor of Accounting, Islamic Azad University of Mashhad, Mashhad, Iran.

3 Ph.D. Student of Accounting, Islamic Azad University, North Tehran Branch, Tehran, Iran.

10.22103/jak.2020.13107.2850

Abstract

Objective: The purpose of this study is to investigate the effects of political uncertainty, resulting from the years of presidential election, on management decisions, regarding the level and market value of cash holdings in the period 2008 to 2017 in the companies listed in the Tehran Stock Exchange. According to the research time period, the years 2009, 2012 and 2017 were selected as the years with high political uncertainty.
Method: According to the purpose of the study, this research is an applied one. In this research, with regard to the type of data and the common method of analysis with such data, the pooled data method has been used.
Result: Empirical evidence from the test of research hypotheses suggested that the political uncertainty resulting from the presidential election has a significant effect on the level and market value of company's cash holdings. Also, research findings indicated when there is uncertainty in the presidential election years, the marginal value of cash holdings decreases.
Conclusion: In response to political uncertainties, companies are influenced by specific decisions about the amount of cash holdings that in turn affect the level and market value of cash holdings.

Keywords

References

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History

  • Receive Date: 26 November 2018
  • Revise Date: 16 July 2019
  • Accept Date: 21 September 2019

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