A review of the relationship between components of internal financial flexibility at Tehran Stock Exchange (TSE) listed companies

Document Type : Research Paper

Authors

1 Assistant Professor, Faculty of Economics and Management, Urmia University, Urmia, Iran

2 MSc., Faculty of Economics and Management, Urmia University, Urmia, Iran

Abstract

A better improvement in dealing with unprecedented financial problems and an efficient use regarding incoming investment opportunities would be gained through knowing the relationship between components of internal financial flexibility of firms. Management of internal financial flexibility is directly related to how we use cash, debt capacity, as well as their interaction during encountering crisis and external shocks. The present study, hence, examines the relationship between the components of the internal financial flexibility of 69 firms listed on Tehran Stock Exchange during 2003-2012. Therefore, the extracted data were tested and analyzed using descriptive statistical methods and panel data patterns. The results indicate that the debt capacity is not effective in predicting the retention amount of cash resources; yet, the amount of cash resources retention is considered as one of the factors influencing determination of the debt capacity of firms.

Keywords

References

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