Cash holding is an identification channel for threat economic unit; accordingly the
changes caused by it will affect financing costs and cash flow sensitivity of investment
probably. Cash holding reduces the risk of financial crisis and is considered as a safe
store for exposure to unexpected losses. In this regard, this research will investigate the
relationship between cash holdings, cash flow sensitivity of investment and financing
costs on firms listed in Tehran Stock Exchange. In this study, a total of 142 companies
listed in Tehran Stock Exchange during 2009-2013have been investigated. In order to
test the hypotheses, linear regression model has been used (pooled). The results show
that cash holding has a meaningful relationship with cash flow sensitivity of investment,
but has a negative and significant relationship with financing costs.
