Internal Control Weaknesses and Market Value of Cash Holdings Department of Accounting, Payame Noor University (PNU), Tehran, Iran

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Hassanpour Davood; SAFARI GERAYLI MEHDI

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Journal: MANAGEMENT ACCOUNTING Year:2019 | Volume:12 | Issue:43 Page(s): 167-178

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Information Journal Paper

Title

Internal Control Weaknesses and Market Value of Cash Holdings Department of Accounting, Payame Noor University (PNU), Tehran, Iran

Author(s)

Hassanpour Davood | SAFARI GERAYLI MEHDI | Issue Writer Certificate

Keywords

internal control weaknessesQ1

cash holdings valueQ1

managerial opportunistic behaviorQ1

Abstract

The existence of weak internal controls provides directors to engage in opportunistic exploitation of corporate cash resources. As such, corporate cash holding is anticipated to increase investors' concerns, which, in turn, leads to the underestimation of corporate cash value in the market. Accordingly, the present study examines the effect of internal control weaknesses on the market value of cash holdings. In doing so, Faulkender & Wang (2006) model was used to measure the market value of cash holdings. The research hypothesis was tested based on a sample of 97 firms listed on the Tehran stock exchange during the years 1391 to 1395 and using multiple regression model based on panel data techniques. The results indicate that presence of internal control weaknesses reduces the market value of corporate cash holdings. This suggests that investors undervalue the cash held in the firms with weak internal controls.

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APA: Copy

Hassanpour, Davood, & SAFARI GERAYLI, MEHDI. (2019). Internal Control Weaknesses and Market Value of Cash Holdings Department of Accounting, Payame Noor University (PNU), Tehran, Iran. MANAGEMENT ACCOUNTING, 12(43 ), 167-178. SID. https://sid.ir/paper/198830/en

Vancouver: Copy

Hassanpour Davood, SAFARI GERAYLI MEHDI. Internal Control Weaknesses and Market Value of Cash Holdings Department of Accounting, Payame Noor University (PNU), Tehran, Iran. MANAGEMENT ACCOUNTING[Internet]. 2019;12(43 ):167-178. Available from: https://sid.ir/paper/198830/en

IEEE: Copy

Davood Hassanpour, and MEHDI SAFARI GERAYLI, “Internal Control Weaknesses and Market Value of Cash Holdings Department of Accounting, Payame Noor University (PNU), Tehran, Iran,” MANAGEMENT ACCOUNTING, vol. 12, no. 43 , pp. 167–178, 2019, [Online]. Available: https://sid.ir/paper/198830/en

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