International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

The Relation between Stock Liquidity & Cash Holdings in Tehran Stock Exchange
Reza Tehrani, Roya Darabi, Sara Izy

Corporations have a tendency to hold large proportion of their assets in the form of cash . This subject has attracted researchers to determine factors that influence it. The current study shows that there is a financial markets channel that affects corporations' cash holdings ; so according to the rapid growth of the capital market in Iran, the necessity of such investigations is obvious. This present study uses panel data for a sample of 200 firms listed in the Tehran Stock Exchange over the period from 2007 to 2012 to analyse the relation between cash holdings and liquidity factors included value of transactions, number of transactions, turnover rate and trading probability. Our results show that value of transactions, number of transactions and turnover rate are positively related to cash holdings at a 95% confidence level; so that an increase in each of these variables will lead to increasing in cash holdings; however we find no significant relation between trading probability and firms' tendency to accumulate cash.

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