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International Journal of Innovation and Applied Studies
ISSN: 2028-9324     CODEN: IJIABO     OCLC Number: 828807274     ZDB-ID: 2703985-7
 
 
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The Effect of Political Support on Companies' Cash Holding Level


Volume 10, Issue 3, March 2015, Pages 903–916
Accounting, Economics and Financial Management Conference (AEFMC 2014), Iran 26-27 October 2014

 The Effect of Political Support on Companies' Cash Holding Level

Farzin Rezaei1 and Kamaloddin Saadati2

1 Assistant Professor in Accounting, Member of Management and Accounting Faculty, Qazvin Branch, Islamic Azad University, Qazvin, Iran
2 Master of Accounting, Islamic Azad University of Qazvin, Iran

Original language: English

Received 28 February 2015

Copyright © 2015 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract


Since the political power ring is not clearly separable from the economic power ring, and the government's political support affects the economic role-making of companies, this study seeks to explore the effect of the political support of the government on the company's cash holding level. In addition, the intervening effect of the agency cost was examined. Political support means extensive relationship with companies and government. Maintaining extensive relationship with government over time leads to satisfaction and political support of the government. The time period of the research is during the years 2003-2012 .The sample consists of 98 companies. The research method is correlational. The "Least squares method" was used in order to test the hypotheses. The results suggest that there is a negative and significant relationship between political support and cash holding level .Furthermore, the effect of political support on the cash holding increases with the rise in agency cost and the negative relationship between political support for companies and cash holding is affected by high agency cost.

Author Keywords: political support, cash holding, agency cost.


How to Cite this Article


Farzin Rezaei and Kamaloddin Saadati, “The Effect of Political Support on Companies' Cash Holding Level,” International Journal of Innovation and Applied Studies, vol. 10, no. 3, pp. 903–916, March 2015.