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Linear and Nonlinear Relationship between Inflation, Operating Cycle and Cash Holdings: Evidence from Iran

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  • Akhgar M Omid
  • Ebrahimi Jamil

Abstract

Cash holding strategy is one of the most important factors that firm should take into account to prevent additional charges. On this account, firms should pay heed to those factors that influence cash holding. For this purpose, in this research, the influence of inflation and operating cycle on the level of cash holding in firms is surveyed. The statistical population of this paper include all of the accepted corporations in the Tehran Stock exchange, from which 132 corporations, operating from 2007 to 2014 have been chosen. To achieve the goal of this research, 4 hypotheses have been proposed. The results obtained from the research’s hypotheses test which uses non-linear regression model, suggests that there is no significant relationship between the inflation and the amount of cash holding, whereas there is a negative and significant relationship between the operating cycle and the amount of cash holding which in case when the operating cycle reaches a specific level will change into a positive relationship.

Suggested Citation

  • Akhgar M Omid & Ebrahimi Jamil, 2017. "Linear and Nonlinear Relationship between Inflation, Operating Cycle and Cash Holdings: Evidence from Iran," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 7(4), pages 300-310.
    • Handle: RePEc:asi:ijoass:v:7:y:2017:i:4:p:300-310:id:2881
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