aAssistant Professor, Department of Accounting, University of Isfahan, Iran
bAssistant Professor, Department of Economics, University of Isfahan, Iran
cStudent of Superior Expertise, Financial Management, University of Isfahan, Iran
*Corresponding Author
Online published on 20 February, 2014.
Cash management is one of the most important duties of the companies’ managers for maximization of stockholders wealth, and requires setting balance between cash holding costs and insufficient cash costs, which the type and size of the costs depend on financial strategy of each company. Since both companies which have financial shortage or cash surplus encounter many problems, so studying the rate of held cash deviation from goal level, speed of cash adjustment to goal level and company factors which affecting this speed is an important issue for companies’ managers. This research study the existence of optimal cash holding level and also estimate the average speed of current cash adjustment towards goal level for the Iranian companies using dynamic model of cash holding and generalized method of moments which results indicate the existence of optimal cash holding levels for the companies and that average cash adjustment speed is 0.635.
Optimal cash holding level, dynamic model of cash holdings, speed of cash adjustment
