Determinants of corporate cash holdings in tranquil and turbulent period: evidence from an emerging economy

Jebran, Khalil; Iqbal, Amjad; Bhat, Kalim Ullah; Khan, Muhammad Arif; Hayat, Mustansar

doi:10.1186/s40854-018-0116-y

Cited by 48 publications

(59 citation statements)

References 34 publications

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“…Firm size has a significant negative association with cash holdings, which is consistent with trade-off theory. Since larger firms can gain profit through economies of scale [151], have constant cash flows, prefer more diversification, and have easy accessibility of financial markets with low borrowing cost [30,61], capital expenditure also negatively affects cash holding, consistent with Jebran et al [140]. e relation between dividends and cash holdings proxies is negative and statistically significant, consistent with trade-off theory and existing studies [137,152].…”

Section: Resultssupporting

confidence: 84%

“…Further to measure the number of large shareholders (LS), we included second-to fifth-LS holding at least 10% equity rights [46]. By following the pecking order theory, the trade-off theory, and prior empirical studies [38,53,115,140], we incorporated control variables (see Appendix A).…”

Section: Multiple Large Shareholders: Moderatingmentioning

confidence: 99%

“…Capital expenditure (CE) is the ratio of summation change in fixed assets and depreciation to net assets. It may negatively affect cash because the investment decision generally decreases the cash balance of the firms [140]. Firm size (FS) measures through the natural logarithm of net assets.…”

Section: Control Variablesmentioning

confidence: 99%

See 2 more Smart Citations

Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms

Um-e-Habiba

Husnain³

et al. 2021

Complexity

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This study contributes to the literature by exploring the relationship between board financial expertise and cash holding policy and further showing how this relation is moderated by multiple large shareholders (MLS). This research is based on agency theory, resource dependence, trade-off, and pecking order theory to confirm how resourceful directors screen cash holding practices. This study selects the 100 listed family firms from the emerging economy of Pakistan for the period of 2006–2017. With the use of static (random and fixed effect estimator) and dynamic (GMM) estimation techniques, this study reveals that the financial expertise of the board members has a significant negative impact on the firms’ cash holding level. Further, moderating effect of MLS between board financial expertise and cash holding is significantly positive due to weak corporate governance mechanisms in family firms. Moreover, the research has implications for developing corporate governance mechanism and the management of liquid assets that corporate management might use for their benefits.

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Section: Resultssupporting

confidence: 84%

Section: Multiple Large Shareholders: Moderatingmentioning

confidence: 99%

See 1 more Smart Citation

Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms

Um-e-Habiba

Husnain³

et al. 2021

Complexity

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show abstract

“…Ratio analysis of firms has been used to reveal financial health or failure ever since Beaver [48] and Altman [49], meanwhile many studies visited liquidity in this context [50,51,52,53,54] along with the indicators or variables in the recent literature on distress and bankruptcy [55,56,57,58,59,60] and trade credits [61,62] or bank credits [63,64,65] including accounts receivable in a specific sector [66]. However, we have founded a gap therein.…”

Section: Resultsmentioning

confidence: 99%

“…Any risky accumulation of accounts receivable would therefore have the conditions become tougher. Cash flow is listed among the key causes of cash holdings for a firm [60,67,68]. Nevertheless, accounts receivable may create fluctuations in the net cash flow.…”

Section: Resultsmentioning

confidence: 99%

Bank Credits and Their Influence on Accounts Receivable: The Case of the Forestry Products Sector in Turkey

Acikgoz

Demirkol

2019

JEMT

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The leverage of bank credit may result in different consequences on current assets. As the accounting procedures report financial credit in two significant terms, short-term bank credit and long-term bank credit, the study tries to reveal the effect of those liabilities on the level of accounts receivable in the forestry products sub-sector in Turkey. The study examines a set of long-term data including current ratio, cash and cash equivalents ratio, and short-term inventories ratio as control variables to test two different models in which either short or long-term bank credit consequence is predicted. The results confirm that time constraints of bank credits have both significant roles on the level of account receivables. However, the significance is barely higher for the effect of long-term bank credit. Therefore, we conclude that the businesses of the forestry products sector in Turkey should also be sensitive primarily on the level of their long-term bank credit along with the level of short-term bank credit amongst the liabilities in balancing the accumulation of accounts receivable. Thus, businesses of the sector would better consider the level of bank credits in the conditions of risky, non-performing or accumulating accounts receivable.

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The role of shareholders and creditors' rights in affecting cash holdings and firm value: A recent evidence from ASEAN

2021

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This study investigates the impact of shareholders' and creditors' rights (CR) on cash holdings (CH) and the firm value in emerging economies (the Association of Southeast Asian Nations) and based hypotheses on the characteristics of these markets. The sample contains 648 listed manufacturing firms from Malaysia, Singapore, Indonesia, Thailand, and the Philippines for the period 2005-2015. The results suggest that higher investor protection leads to the accumulation of more cash. Besides, a powerful country-level framework controls the value-destroying activities of firm managers. The results also support the flexibility hypothesis by providing evidence that strong CR in the economy lead to higher CH by the managers. Finally, investor protection in the presence of high CR reduces the incentive to hold more cash supporting stewardship theory in these markets. The results being economically robust are innovative and valuable to academics and policymakers in ASEAN.

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Determinants of corporate cash holdings in tranquil and turbulent period: evidence from an emerging economy

Cited by 48 publications

References 34 publications

Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms

Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms

Bank Credits and Their Influence on Accounts Receivable: The Case of the Forestry Products Sector in Turkey

The role of shareholders and creditors' rights in affecting cash holdings and firm value: A recent evidence from ASEAN

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