Investigating the effect of unconditional conservatism and the amount of cash held on abnormal stock returns

The main purpose of this study is to investigate the effect of conservatism on the market value of cash held inventory. The statistical sample of the study consists of 140 companies selected from companies listed in Tehran Stock Exchange during the period 2012-2017. In the present study, the hypotheses were investigated using hybrid data and generalized least squares method. The findings suggest that an increase in cash holdings leads to anomalous returns on stocks and reduces conservatism. At the same time, the results also suggest that increasing the cash flow leverage and market leverage lag variables lead to a decrease in the market value of the cash held but by incorporating the conservative factor into the model of the two factors downsizing the cash market value. Adjusted and, as a result, the final value of a change in held-up cash increases, thereby increasing the involvement of the conservative factor.