Zhila Mohammadvand, Masoud Ghahremani * Department of Public Administration, Mahabad Branch, Islamic Azad University, Mahabad, Iran

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1 Inernaional Research Journal of Applied and Basic Sciences 2016 Available online a ISSN X / Vol, 10 (1):82-87 Science Explorer Publicaions Deermining he Relaionship beween Changeabiliy of Cash Balance and Abnormal Reurn As Well As Commercial Credi of Acive Companies in he Field Of Food Indusries Adoped In Tehran Sock Exchange Zhila Mohammadvand, Masoud Ghahremani * Deparmen of Public Adminisraion, Mahabad Branch, Islamic Azad Universiy, Mahabad, Iran * Corresponding Auhor mhd472002@yahoo.com ABSTRACT: Unexpeced changes of abnormal reurn having o do wih companies are he concep ha has been considered several imes by marke aciviss and invesors. In so doing, he marke changes are aken ino accoun as he imporan evens in he field of science and pracice. In general, fear of crisis is deemed as permanen source of sress and anxiey. The aim of he presen sudy is o deermine he relaionship beween cash balance changeabiliy and abnormal reurn as well as commercial credi of acive companies in he field of food indusry in Tehran socks cener. The saisical sample comprises of 27 acive companies and he sudy lass for 7 years i.e o Research hypoheses were sudied using correlaion mehod and making use of mulivariae regression models. The findings indicaed ha here was a significan relaionship beween he liquidiy level flucuaions due o economic shocks and abnormal reurn of companies. In oher words, when i comes o he changes in economic shocks, he increase of changes in cash balance would lead o increase in capial marke response and would resul in more reurn of companies compared o capial marke reurn. Also, liquidiy did no have a deermining role in commercial credi of companies. Keywords: changeabiliy of cash balance, abnormal reurn, commercial credi INTRODUCTION Marke economic shocks are considered as one of he ineresing evens in he field of science and proacive. Generally, invesors and managers of companies consider he fear of crisis as permanen source of sress and anxiey (Almedia e al., 2012). Unexpeced changes of abnormal reurns relevan o companies is he concep ha has been considered repeaedly by marke aciviss and invesors. In general, wo-digi negaive index reurn in a couple of days and in shor ime duraion as well as liquidiy increase wihou any suppor are aken ino accoun as he economic shock for companies, simply, economic shock is defined as a sudden decline in socks index in a shor ime (Dochin e al. 2010). Several sudies conduced in he field of liquidiy have drawn heir aenion o experimenal heories and heir sudies have shown he possible bond beween companies' liquidiy size and real flucuaions of economy (Flanrey & Lokhar, 2009). Considering he developmen and deph of marke in every financial marke, i is claimed ha here are a variey of insrumens o inves. One of he fundamenal issues in invesmen is considering he credi ranking of companies since i is feasible ha a number of invesors require he access o heir financial resource. Tha is he fac hey look for invesing in companies whose liquidiy size is high and one of he ways o idenify higher levels of liquidiy is considering heir commercial ranking. The rae of flucuaions has o do wih welcoming he ransacion in sock exchange by invesors. Invesors are well aware ha in case hey end o sell heir capials, hey should have in mind wheher here is an appropriae marke for hem or no. The issue is regarded as he risk appearance of liquidiy size for he assumed company in he mind of buyer which can lead o he ignorance of invesor (Almedia e al., 2012). Sudying he effec of flucuaions perinen o liquidiy level derived from economic shocks on abnormal reurn and commercial credi of companies would be he fundamenal soluion in relaion o answering he quesions. The focus of he curren sudy is o invesigae he effec of flucuaions having o do wih liquidiy level due o economic shocks on abnormal reurn and commercial credi of companies in adoped companies in Tehran sock exchange. So, he main research quesions is if he proposed

2 flucuaions of liquidiy level derived from economic shocks have any effec on abnormal reurn and commercial credi of companies. Research hypoheses Hypohesis 1: here is a significan relaionship beween changeabiliy of cash balance due o economic shocks and abnormal reurn of companies Hypohesis 2: here is a significan relaionship beween changeabiliy of cash balance due o economic shocks and commercial credi of companies Relaed sudies Young and Kim (2009) invesigaed he relaionship beween abnormal reurn and he syles of financial suppor, company size and cash pays. The resuls indicaed ha only cash pay was correlaed wih abnormal reurn. Emaima e al. (2009) sudied he value and credi of obliged and volunarily unleash in capial marke and concluded ha obliged unleashing had a negaive relaionship wih insiuions value afer conrolling he variables such as company's beneficiary and size. Also, hey showed ha volunarily unleashing was no significan in relaion o insiuions' value. Cameron Trong (2011) drew he aenion on invesigaing he relaionship beween abnormal reurn and income of share wih using company's crieria, expenses of ransacions and P/E raio. The resuls manifesed ha hese crieria had an impac on companies performance. Zarei (2010) surveyed he liquidiy effecs on bubble behavior of housing expenses in civil disrics of Iran for he years The resuls showed ha liquidiy had a considerable effec in his duraion. Such an effec was repored higher han he common Era. Jabarzade e al., (2010) idenified he affecive facors on abnormal reurn of share in he iniial disribuion. The resuls manifesed ha he predicing error of each share, marke common circumsances prior o disribuion, he raio of owing o shareholders, he raio of pure ineres and reurn of shareholders were in direc relaionship wih predicing variables of each share in a posiive form and he reverse relaionship was repored wih he raio of pure ineres o abnormal reurn in 12 monh duraion. None of he variables was correlaed wih abnormal reurn. Sajadi and Zarezade (2011) invesigaed he relaionship beween managers' encouragemen and moivaion plans and crieria for performance evaluaion in adoped companies of sock exchange. They concluded ha here was a relaionship beween paid wage o managers and economic-based crieria. Also, he findings revealed ha here was a significan relaionship beween he percen of managers' shareholding and marke added value and ha here was no significan relaionship wih oher economic crieria. RESEARCH VARIABLES AND THE QUALITY OF CALCULATION Research dependen variables The mehod of evaluaion has been aken from he one proposed by Apendini and Gariga (2014). The applied mehods have ben rooed in heoreical and experimenal evidences which have been employed in line wih esing he resrarch hypoheses by he researcher. Abnormal reurn ) AR, (: he expeced reurn of share equals o he difference beween company i reurn rae and marke reurn. In order o deermine he expeced reurn of share, balanced model of marke is used. AR R R (1) i i m Commercial credi ( AP ): in order o calculae he commercial credi of companies based on he sudy of Garcia and Monriol (2014), he sudy has made use of he raio of receivable accouns o company sale. Receivable accouns AP = Sale income Research independen variables The independen variable is he flucuaions of liquidiy level derived from economic shocks where Ribelo (2005) repor is used so as o calculae i: (3) CRISIS * LIQ I Y N K D / N CRISIS * LIQ R* LIQ CRISIS: reflecs he economic shocks and o obain i requires he use of inernal GDP growh. So, he eras which have experienced negaive GDP are aken ino accoun as economic shock and he CRISSI variable would be equal o 1. 83

3 LIQ LIQ = = equals o company liquidiy and he calculaion is as follows: Cash-based asses Book value of all asses Saisical populaion The research has made use of sraified financial daa and audied cases of acive companies in he field of food indusries in Tehran sock exchange. Considering he research variable, one is able o define he following crieria in excluding sampling, The financial period would lead o 29 h of February in erms of he increase of comparabiliy There would be no fiscal year during he years of invesigaion ( ) The financial daa are available The required daa are available in definiion secion Table 1. The qualiy of choosing and exracing he sample The number of acive companies in food indusries o have paricipaed in sock exchange during The number of companies whose financial fiasco leads o lae February 31 The number of companies which have no experienced change in financial fiasco 31 Acive company ransacion symbol and more han 4 monhs per year, no sop of ransacion symbol 27 The number of companies whose daa have been colleced 27 The qualiy of hypoheses esing In order o es he research hypoheses, he provided regression models is used i.e. Amepndini and Gariga (2014). These models have been aken from he sudy conduced by Tang and Wee (2008). In hese regression models, abnormal reurn and commercial credi are considered as he dependen variables and as a funcion of independen and conrol variables, he aforesaid models are as follows: Firs hypohesis esing model AR 7 CRISIS * LIQ 0 DEBT 1 8 CF _ Volailiy Second hypohesis esing model AP 7 CRISIS * LIQ 0 DEBT 1 8 M / B CF _ Volailiy 2 9 Size 3 DIV _ Dummy M / B 2 9 Size 3 NWC DIV _ Dummy RESULTS 4 ε 4 ε NWC CF 5 CF 5 CPAX 6 CPAX The resuls of he firs hypohesis esing Hypohesis 1 Hypohesis 1: here is a significan relaionship beween changeabiliy of cash balance due o economic shocks and abnormal reurn of companies To es he hypohesis, regression model is used in which abnormal sock reurns is considered as he dependen variable and as a funcion of independen and conrol variables. The resuls from analyzing he regression model having o do wih he firs hypohesis are given in able 2. Table 2. The resuls of saisical analysis for he firs hypohesis Balanced R 2 Wason saisic camera F saisic F level of significance The saisical analysis resuls having o do wih he credi of regression model is provided in he firs secion of he above able. The deermining coefficien of regression model is This means ha his model is able o predic 22.5% of he changes relevan o abnormal sock rerun of companies in saisical sample hrough independen variables. Also, he resuls show ha Wason saisic camera falls beween 1.5 and 2.5, so here is no srong correlaion beween he regression sample errors. In addiion, no self-correlaion is found beween he errors as one of he fundamenal hypoheses of regression in relaion o he sudied model. 6 84

4 The resuls of regression variance analysis (ANOVA) which his decided based on he F saisic, is provided in he wo las columns of able 2 for he sudied model in he firs secondary hypohesis esing. The saisical hypoheses relevan o he saisical analysis are as follows. H0: βi=0 regression sample is no significan H1: βi 0 regression sample is no significan Table 3 Variable Β coefficien value (sandardized) T saisic Level of significance CRISIS*LIQ MB Size NWC CF CPAX DEBT Cf_Vol DIV The level of significance for F saisic for he model is less han he level of error for he es, so null hypohesis is rejeced and he esimaed regression is saisically significan and he relaionship beween he research variables is ha of linear. The esimaed coefficien for CRISIS*LIQ variable which shows he relaionship beween he flucuaions of liquidiy level derived from economic shocks and abnormal reurn of companies is and ha of 0.06 level of significance. This finding shows a direc and significan relaionship beween he menioned variables, in oher words, he increase of companies' liquidiy level in economic shock period leads o he increase in heir abnormal reurn. The resuls having o do wih he conrol variables indicae ha here is a direc and srong relaionship beween he raio of marke value o book value, pure asse in balance and divided share by abnormal reurn of share. There is a reverse relaionship beween he abnormal reurn and financial leverage. In oher words, companies caegorized by higher levels of owing have experienced lower levels of reurn. Also, cash flow, capial expenses and flucuaions of cash flow were no correlaed wih abnormal reurn. These findings indicae ha he aforesaid variables are no aken ino accoun as he affecive facors on response of asse marke and hey emphasize ha he asse marke aciviss are suggesed no o consider hem in heir shor-erm decision-making process. Generally, he resuls indicaed ha here was a significan and reverse relaionship beween he level of liquidiy derived from economic shocks and abnormal reurn. These findings are in correspondence wih he claim proposed in he firs hypohesis which is acceped in 95% level of confidence. Resuls for he second hypohesis esing Hypohesis 2: here is a significan relaionship beween changeabiliy of cash balance due o economic shocks and commercial credi of companies To es he hypohesis, regression model is used in which commercial credi of companies is considered as he dependen variable and as a funcion of independen and conrol variables. The resuls from analyzing he regression model having o do wih he firs hypohesis are given in able 4. Table 4. The resuls of saisical analysis for he second hypohesis Balanced R 2 Wason saisic camera F saisic F level of significance Table 5 Variable Β coefficien value (sandardized) T saisic Level of significance CRISIS*LIQ MB Size NWC CF CPAX DEBT Cf_Vol DIV The esimaed coefficien for CRISIS*LIQ variable which shows he relaionship beween he flucuaions of liquidiy level derived from economic shocks and commercial credi of companies is and ha of level of significance. This finding shows ha here is no significan relaionship beween he variables. The rrsuls of he conrol variables indicae ha here 85

5 here is a direc and srong relaionship beween he raio of marke value o book value, company size, pure asse in cash flow and financial leverage wih companies commercial credi. In oher words, companies caegorized by larger size and higher levels of owing enjoy higher levels of commercial credi. Also, here is no relaionship beween he commercial credi and cash flow variables, capial-based expenses, cash flow flucuaions and divided share. These findings manifes ha he aforesaid variables have no deermined he level of commercial credi for companies and one is no able o rely on hem when i comes o evaluaing companies commercial credi. Generally, he resuls implied ha here was no saisically significan relaionship beween he flucuaions of liquidiy level derived from economic shocks and commercial credi reurn of companies. This finding does no suppor he claim proposed in second hypohesis and i is rejeced in 95% level of confidence. DISCUSSION Findings of he firs hypohesis esing showed ha here was a direc and srong relaionship beween he flucuaions of he liquidiy level derived from he economic shocks and abnormal reurn. Based on he heoreical and experimenal evidences, one can consider he following inferences abou he findings of he firs hypohesis. Firs, i is probable ha he cash savings of sudied companies were highly affeced by he changes compared o oher periods. These findings indicae ha he menioned companies were under he impac of major variables of economy and changes in major economic variables led o change in heir resource managemen soluions. Second, i is probable ha shareholders and capial marke aciviss draw heir aenion o he cash savings f adoped companies in sock exchange during he economic shock period. This is feasible o be formed by perceiving he capial marke on he par of he aciviss in relaion o managemen soluions of companies' cash savings. They migh deem cash savings changes as he opimum sympom of financial flexibiliy in companies. Findings of he second hypohesis esing manifesed ha here was no significan relaionship beween he flucuaions of liquidiy level derived from economic shock and companies' commercial credi. Theoreical principles clear ou ha in case companies enjoy consisen cash savings, i is more probable ha hey have more credi selling. However, findings of he presen sudy indicaed ha he abovemenioned heoreical principles have no been rue for he sudied companies. One can aain wo general inferences. Firs, i is probable ha he flucuaions of cash flow of sudied companies are no o he exen ha migh have impac on managemen soluions. In oher words, he severiy of companies' liquidiy has been non-significan during he sudy period. Second, i is feasible ha he sudied companies' managers have no considered he cash balance and is flucuaions when deermining he soluions. Tha is o say ha cash flucuaions migh no be aken ino accoun as a deermining facor of commercial credi from managers' perspecive. Suggesions Based on he obained resuls, he sudy considers following as he efficien suggesions. Applicable suggesions Based on he firs hypohesis resul ha here is a direc and srong relaionship beween he flucuaions of liquidiy level derived from economic shocks and abnormal reurn of companies, i is suggesed for managers ha hey consider poenials and invesing opporuniies as he main facor o deermine he reain of cash and hey ake ino accoun he macroeconomic variables and avoid any focus on cash flows. Based on he resuls obained from esing he second hypohesis saying ha here was no relaionship beween flucuaions of liquidiy level derived from economic shocks and commercial credi of companies, he presen sudy recommends ha managers draw heir aenion o company cash savings and is consisency when deermining he financial soluions and make heir effors o adjus such soluions in a way ha he probabiliy of experiencing financial limiaions reduces. Suggesions or furher researches Invesigaing he relaionship beween cash balance flucuaions and companies invesing opporuniies Invesigaing he relaionship beween cash flow and invesmen efficiency of companies considering he financial limiaions Invesigaing he relaionship beween financial leverage and commercial credi of companies in differen commercial cycles 86

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