The Impact of Excess Cash on Conservatism Influence on Dividend Payout

Due to the agency conflict in firms, shareholders demand to pay dividends and force management to distribute more dividends. Paying greater dividends jeopardizes the interests of creditors. Thus, it is attempted by using the conservatism in financial reporting, interests of shareholders and also interests of creditors in the distribution of dividends to be maintained. on the other hand, a number of factors including excess cash increase the agency conflicts in the company. Therefore, the purpose of this study is to investigate the effect of excess cash on conservative influence on the dividend payment. The sample is consisted of 88 Firms listed in Tehran Stock Exchange from 2008 to 2013. In order to test the research hypotheses, Tobit Regression Model and Panel data are utilized. The results show that conservatism has a negative significant impact on the payment of dividends in firms with excess cash in high-level. But in firms with excess cash in low-level, conservatism has an insignificant impact on the payment of dividends. Also, the excess cash in high-level has a significant effect on the amount of conservatism influence on the dividend payment.