Investigating the Relationship between Cash Retention and Investment Efficiency in Companies in Financial Crisis Considering the Role of Corporate Governance

اقتصاد پولی مالی

Article 5, Volume 30, Issue 26, July 2023, Pages 134-163   

Document Type: Original Article

DOI: 10.22067/mfe.2023.80803.1278

Authors

Abdolrasoul Rahmanian Koushkaki^{* 1}; Faeze Nazari²

¹Assistant Professor, Department of Accounting, Payame Noor University, Tehran, Iran

²MSc, Department of Accounting, Payame Noor University, Tehran, Iran

Abstract

Objective: The main purpose of this study is to investigate the relationship between cash retention and investment efficiency in companies in financial crisis with regard to the role of corporate governance.
Methods: The present study is applied and from a methodological point of view, causal (post-event) correlation. The statistical population of the study is all companies listed on the Tehran Stock Exchange and using the systematic elimination sampling method, 132 companies were selected as the research sample and were examined over a period of 8 years between 2013 and 2020.
Results: The results of testing the research hypotheses showed that there is a direct relationship between cash retention and investment efficiency. The interaction between corporate governance and cash retention has an adverse effect on investment performance, but ultimately the interaction between corporate governance and cash retention in companies in financial crisis has no effect on investment efficiency.
Conclusion: Managers of companies with well-written and principled plans to manage liquidity resources and accumulation of cash in companies are able to make quick decisions when faced with high-yield investments. Also, having a well-written plan to prevent the occurrence of financial crisis and, if possible, use teams specializing in financial and economic fields to prevent or exit the financial crisis.

Keywords

Cash Retention; Corporate Governance; Financial Crisis; Investment Efficiency

References