Impact of Cash Holdings on Return on Assets of Companies Listed on the Tehran Stock Exchange

Abstract

This study aims to investigate the impact of cash holdings on the return on assets (ROA) of companies listed on the Tehran Stock Exchange. This research is categorized as a descriptive accounting study. From a purpose-oriented perspective, it is applied research, and methodologically, it employs a correlational–regression approach. The statistical population comprises all companies listed on the Tehran Stock Exchange between 2010 and 2015. A sample of 102 companies was selected using the purposive elimination method. Data analysis was performed using the PLS2 technique. The results of the structural equation modeling indicated that the significance level between cash holdings and return on assets is 0.000, which confirms a significant relationship between the two variables at a 0.05 error level. Therefore, it can be concluded that cash holdings have a significant impact on the return on assets of companies listed on the Tehran Stock Exchange. Moreover, based on the factor loadings, this relationship is found to be direct.