Univrsity Of Tehran Press Accounting and Auditing Review 2645-8020 20 4 2014 02 20 Asymmetric Cash Flow Sensitivity of Cash Holdings Asymmetric Cash Flow Sensitivity of Cash Holdings 61 76 36588 10.22059/acctgrev.2014.36588 FA Sahar Sepasi Assistant Prof. in Accounting, Tarbiat Modares University, Tehran, Iran Malek Yabloui Khamsaloui Ph.D. Student in Accounting, Islamic Azad University, Science and Research Branch, Kermanshah, Iran Journal Article 2013 09 02 This research documents the asymmetric corporate cash<br />flow sensitivity of cashholdings. Using a sample of 630 firm-years<br />(companies in Tehran Stock Exchange were selected for years 1384 to<br />1390) the corporate reactions to changes in their cash holdings in case<br />of negative and positive cash flows were examined. For testing the<br />hypothesisabout asymmetric cash flow sensitivity, Riddick and<br />Whited (2009) models were used. Results show that firms have<br />different level of responses to their cash holding when faces positive<br />and negative cash flow: meaning that the relation between cash<br />holding and positive cash flow is different than relation between cash<br />holding and negative cash flow. We document that the cash flow<br />sensitivity of cash flow is negative when a firm faces a positive cash<br />flow environment, and the cash flow sensitivity of cash flow is<br />positive when a firm faces negative cash flow. This asymmetry may<br />be due to several reasons, including binding project contracts, bad<br />news withholding and agency costs. This research documents the asymmetric corporate cash<br />flow sensitivity of cashholdings. Using a sample of 630 firm-years<br />(companies in Tehran Stock Exchange were selected for years 1384 to<br />1390) the corporate reactions to changes in their cash holdings in case<br />of negative and positive cash flows were examined. For testing the<br />hypothesisabout asymmetric cash flow sensitivity, Riddick and<br />Whited (2009) models were used. Results show that firms have<br />different level of responses to their cash holding when faces positive<br />and negative cash flow: meaning that the relation between cash<br />holding and positive cash flow is different than relation between cash<br />holding and negative cash flow. We document that the cash flow<br />sensitivity of cash flow is negative when a firm faces a positive cash<br />flow environment, and the cash flow sensitivity of cash flow is<br />positive when a firm faces negative cash flow. This asymmetry may<br />be due to several reasons, including binding project contracts, bad<br />news withholding and agency costs. https://acctgrev.ut.ac.ir/article_36588_a293f6d0a7b3dbc64b062ee594f6d270.pdf