Indian Journal of Science and Technology

Abstract

The main aim of the present research is to study the relationship between Institutional investment horizon and investment–cash flow sensitivity in firms listed in Tehran Stock Exchange. The population of the present research includes all the firms listed in Tehran Stock Exchange during 2007 to 2011 that the sample size with the use of screening method and after elimination of irrelevant observations has been obtained to be equal to 102 firms. In this study the institutional investment horizon and type of industry has been considered as independent variables to study their relationship with investment– cash flow sensitivity of the firms in our sample In the present study panel data with fixed effect has been used and the obtained results from data analysis of the firms with the use of multi-variable regression at 95% confidence level indicate that there is a reverse relationship between the investment horizon of institutional investors and investment–cash flow sensitivity of firms. On the other hands, these results indicate that the intensity of the relationship between investment horizon of institutional investors and investment–cash flow sensitivity of firms in different industries is different. In a way that in Metallic mineral and computer industries this effect is not significant while it is significant and reverse in other industries and in medicine industry it has the minimum reverse effect and in basic metals industries has the highest reverse effect. 
Keywords: Capital Expenses, Investment–Cash Flow Sensitivity, Institutional Investment Horizon, Type of Industry