The Impact of Oil Price Uncertainty on Corporate Cash Holdings: Evidence from Iran

Rezagholizadeh, Mahdieh; Mohseni Maleki, Bahram; Khazaey Kuhpar, Hamid

doi:10.22054/joer.2023.68086.1066

Document Type : Research Paper

Authors

¹ Associate Professor of Economics, Faculty of Economics and Administrative Science, University of Mazandaran, Babolsar, Iran

² Assistant Professor of Accounting, Faculty of Economics and Administrative Science, University of Mazandaran, Babolsar, Iran.

³ MSc in Economics, Faculty of Economics and Administrative Science, University of Mazandaran, Babolsar, Iran

https://doi.org/10.22054/joer.2023.68086.1066

Abstract

Oil prices and their uncertainties significantly impact the economies and financial markets of nations, influencing the cash reserves held by companies. Given the pivotal role of the chemical products industry has an important role in economic development and is also affected by other markets such as the oil market, this study aims to to investigate the effect of Brent oil price uncertainty on the cash holding of the chemical products group in the Tehran Stock Exchange during the period of 2010-2019. The research modeling is based on dynamic panel models and oil price uncertainty is computed through the GARCH method, while the relationships between variables are estimated using the Generalized method of moments (GMM) technique in two steps. The results of the study indicate that there is a positive and significant relationship between oil price uncertainty and cash holdings during the period under review. In addition, the effect of control variables such as financial leverage, cash flow, size, capital expenditures, liquidity, stock return, and return of assets is positive, and the effect of total debt, value added of industry, and interest rates on the cash is negative.

Keywords

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The Impact of Oil Price Uncertainty on Corporate Cash Holdings: Evidence from Iran

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Volume 22, Issue 87 - Serial Number 4January 2022Pages 157-192

Volume 22, Issue 87 - Serial Number 4
January 2022
Pages 157-192