A study on the effect of inflation and operating cycles on the level of cash holding by dynamic counteraction test

Cash flow and the level of cash-holdingare the most important aspectof circulating capital that vitally important on the managing firms’ circulating capital. So, assessing effective factors of cash holding level and identification of key elements and indicators which contribute to its decrease and increase could be effective on efficiency of management that affected by managing firms’ circulating capital and cash-holding. At the macro level, inflation contributes to the price index and could have an influence on both incomes and outgoings of firms and as a result on cash holding level. On one hand, these influences would be extended over the level of cash holding. On the other hand, operating cycles that indicates to the average time it takes for a business’s inventory to turn to cash, could have an important impact on turnover of corporate cash flow and the level of cash holding. This relates to the relationship between operating cycle and the period of business’s activities including the period of the whole cash flow. This study discovers the effect of inflation and operating cycles on the level of cash holding by dynamic cointegration test. According to above mentioned literature, researcher examines these predicted relationships using a sample of 122 firms over the 1385–1393 periods (2006-2014). Consistent with theoretical predictions, results indicates that inflation has a significant direct impact on the level of cash holding. According to this connection, an increase in inflation causes to decrease the level of cash holding collection period and purchasing cycle have not significantstatistical impact on the level of cash-holding

کلیدواژه ها:

Cash-holdinglevel ، Operating cycles and Inflation