Investigating the Asymmetric Models of Cash Holding Adjustment Speed: Dummy Variable, Quadratic and Threshold Regression Models

This study examines the adjustment speed of cash holdings using asymmetric models to efficiently manage cash and elucidate relevant optimization policies. The sample consists of 117 firms listed on the Tehran Stock Exchange, covering the period from 2009 to 2018. After identifying the optimal level of cash holdings, various asymmetric models, including the dummy variable approach, quadratic model, and threshold regression model, are employed to assess the adjustment speed of cash holdings. The findings indicate that cash-rich firms exhibit a higher rate of convergence towards optimal cash compared to cash-poor firms. Moreo ver, the results from the quadratic model reveal a non-linear, skewing effect of cash holding adjustment speed across different levels of cash. Thus, there exists an optimal cash holding level that allows firms to deviate from the cash target. If firms fall outside the optimal cash range, cash adjustment occurs at a faster pace, exhibiting both partial and asymmetric behavior.