Corporate Social Responsibility and Market Value of Corporate Cash Holdings

Recently, regulating institutions and stock exchange have emphasized the requirement for disclosing corporate social responsibility reporting to ensure transparency and responsibility in capital market. Therefore, the present study is concerned with investigating the effect of corporate social responsibility on market value of the firm’s cash holdings. To do so, a checklist of 39 items of disclosure which are compatible with Iranian reporting environment was used as a proxy for social responsibility. With a sample of 96 firms listed in Tehran stock exchange during the years 2011 to 2015 and using multiple regression model based on panel data techniques, the research hypothesis was tested. The results indicate that corporate social responsibility disclosure increases the market value of the firm’s cash holdings. In other words, investors assign a higher value to cash held by firms that have a high social responsibility disclosure level.