Financial Statement Comparability and Cash Holdings

The present study is attempts investigate the impact of financial statement comparability on corporate financial cash holdings. To this end, three various proxies based on DeFranco et al’s (2011) were employed to evaluate financial statement comparability, and Ozcan & Ozcan’s (2004) model was also used to measure cash holdings. The research hypothesis was also developed based on the data collected form a sample of 82 firms listed on the Tehran Stock Exchange during the years 2013-2017, and then tested using multivariate regression model based on panel data. The results indicate that financial statement comparability reduces the level of corporate cash holdings. This finding means that, financial statement comparability can mitigate uncertainty and facilitate the monitoring of the evaluation of the managerial performance through attenuating acquisition costs and enhancing the quality and quantity of the information available to investors. Accordingly, firms with comparable financial statements confront with less external financing costs and restrictions, thereby less likely to hold cash. Moreover, these results are robust and are not sensitive with respect to alternative measure of cash holdings and individual analysis of the research hypothesis for each year.