In companies with weak supervision mechanisms, managers have incentives and opportunities in order to use company resources for their own benefits paid by stake holders. In this situation due to its high liquidity, company's cash, faces a high risk of misuse and views being imposed by managers such as expansionism, providing compensations and welfare benefits and other resource wasting ... [Show full abstract] activities. The main objective of this research is to focus on the level of competitiveness in product markets, as an indicator of corporate governance and examining its effect on cash holding policies by public corporate managers. The research period is 5 consecutive years from 2006 to 2010 and the research statistical sample is consists 102 of companies enlisted in Tehran stock exchange. In the main hypotheses of the current research, it is asserted that comparing with other companies, there is a weak relationship between corporate governance mechanisms and cash holding level in companies with high competitive power in product market. Results show that claims are only objective about of board independency and expected results of institutional ownership mechanisms and the size of board was not verified. In general, it seems that the competition in product market has had a great effect in consolidation of monitoring and controlling role of board and specifically it has prevented the company from cash excess.