Cash Holdings in Shariah-Compliant Firms

Hakim, Muhammad Saiful; Liu, Chih-Liang; Kunaifi, Aang

doi:10.4236/tel.2021.111003

Cited by 3 publications

(3 citation statements)

References 20 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, these studies did not investigate how cash holdings can variously impact the performance of Shariah-compliant and conventional firms. Subsequently, using a sample including Shariah-compliant and conventional firms from Indonesia over the years 2016, Hakim et al (2021 confirmed that the determinants of corporate cash holdings varied across the two sets of firms.…”

Section: Literature Review and Hypothesesmentioning

confidence: 84%

“…Islamic corporate finance literature confirmed that cash holdings decisions vary across Shariah-compliant and conventional firms (Alnori et al , 2021; Bugshan et al , 2021a; Hakim et al , 2021). More specifically, Bugshan et al (2021a) found that the cash holdings level is significantly higher in Shariah-compliant firms than their conventional counterparts operating in GCC markets.…”

Section: Literature Review and Hypothesesmentioning

confidence: 90%

“…More specifically, Bugshan et al (2021a) found that the cash holdings level is significantly higher in Shariah-compliant firms than their conventional counterparts operating in GCC markets. Hakim et al (2021) showed that cash holdings levels are higher for Shariah-compliant firms than conventional firms operating in the Indonesian capital market. Bugshan et al (2021a) showed that Shariah-compliant firms adjust toward their desired cash holdings target more quickly than their conventional peers.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

See 2 more Smart Citations

Cash holdings and firm performance: empirical analysis from Shariah-compliant and conventional corporations

Alnori

Bugshan

2022

IMEFM

View full text Add to dashboard Cite

Purpose This paper aims to provide a comprehensive investigation into the different roles of cash holding decisions on Shariah-compliant and non-Shariah-compliant firms’ performance. Therefore, the objective of this study is to analyze the significant relationship of liquidity on Shariah- and non-Shariah-compliant corporations. Design/methodology/approach This study sample includes non-financial firms listed in six Gulf Cooperation Council (GCC) markets between 2005 and 2019. The study uses panel fixed effects and the dynamic generalized method of moments (system-GMM) models to test the relationship between cash holding and firm performance. The firms’ performance is measured using four widely used proxies representing book and market measures of performance including return on assets, return on equity, earnings before interest and tax to total assets and Tobin’s Q. Findings The results explore that the nature of the relationship between cash holdings and performance varies across Shariah-compliant and non-Shariah-compliant firms. Specifically, cash holdings are positively and significantly related to Shariah-compliant firms’ performance. However, cash reserves are not significantly related to conventional firms’ performance. These findings indicate that Shariah-compliant firms rely more on their cash holdings to avoid costly and less available external financing, meet everyday business needs and invest in profitable projects. In contrast, the value for cash holding is less important for non-Shariah-compliant firms, as their external financing options are less restricted compared to Shariah-compliant firms. Research limitations/implications This study is not free from limitations. More specifically, the sample of this study comprises of firms listed in GCC countries, which share common features. It would be interesting for future research to examine the linkage between cash holdings and Shariah-compliant and conventional firms’ performance by applying a larger sample, such as firms located in countries of the Organization of Islamic Cooperation. Practical implications The findings of this paper provide useful insights for managers and investors on the important role of cash management for Shariah-compliant firms. Policymakers and bankers need to develop Shariah-based financial products to ease Islamic financing sources. Moreover, the findings of this paper call for more research on the importance of liquidity management for Shariah-compliant firms. Originality/value This study extends the Islamic finance literature by exploring the key role of cash holdings to Shariah-compliant firms. To the best of the authors’ knowledge, this study is the first study to investigate cash holdings and performance between Shariah-compliant and non-Shariah-compliant firms.

show abstract

Section: Literature Review and Hypothesesmentioning

confidence: 84%

Section: Literature Review and Hypothesesmentioning

confidence: 90%

Section: Literature Review and Hypothesesmentioning

confidence: 99%

See 1 more Smart Citation

Cash holdings and firm performance: empirical analysis from Shariah-compliant and conventional corporations

Alnori

Bugshan

2022

IMEFM

View full text Add to dashboard Cite

show abstract

İslami Hisse Senedi Piyasalarında Finansal Sıkıntı Riskinin Altman-Z ve Springate Modelleri ile İncelenmesi: Katılım 50 Endeksi Örneği

Güçlü

2021

İnsan Ve Toplum Bilimleri Araştırmaları Dergisi

View full text Add to dashboard Cite

show abstract

Cash holdings in sharia-compliant firms: Empirical evidence from Moroccan listed companies

Mouline¹,

Allach²

2023

Revue Management &Amp; Innovation

View full text Add to dashboard Cite

Cet article vise à évaluer dans quelle mesure la conformité à la charia et certains indicateurs économiques et financiers spécifiques aux entreprises affectent leur niveau de liquidité et à examiner leur impact global. Cette étude est importante à la fois pour la littérature sur la finance islamique et plus généralement pour la littérature sur la finance d’entreprise. Pour ce faire, 42 entreprises cotées à la Bourse de Casablanca ont été sélectionnées. Douze années de données financières ont été considérées, de 2007 à 2019, et des modèles d’estimation de données de panel ont été appliqués pour effectuer l’analyse. Nos résultats sont relativement concluants ; ils montrent que les entreprises conformes à la charia ont des niveaux de liquidités significativement plus élevés que les entreprises non conformes à la charia. En ce qui concerne les déterminants économiques et financiers, nos résultats montrent des preuves d’une forte relation positive entre les liquidités et les flux de trésorerie ainsi que les opportunités de croissance. Nous avons ensuite constaté que les liquidités de ces entreprises sont significativement affectées négativement par la taille de l’entreprise, les besoins en fonds de roulement et l’effet de levier de la dette de l’entreprise.

show abstract

Cash Holdings in Shariah-Compliant Firms

Cited by 3 publications

References 20 publications

Cash holdings and firm performance: empirical analysis from Shariah-compliant and conventional corporations

Cash holdings and firm performance: empirical analysis from Shariah-compliant and conventional corporations

İslami Hisse Senedi Piyasalarında Finansal Sıkıntı Riskinin Altman-Z ve Springate Modelleri ile İncelenmesi: Katılım 50 Endeksi Örneği

Cash holdings in sharia-compliant firms: Empirical evidence from Moroccan listed companies

Contact Info

Product

Resources

About