FACTORS INFLUENCING CORPORATE CASH HOLDINGS: A STUDY OF EMERGING ECONOMIES

Authors : Oğuzhan Ercan, Mehtap Öner, Emin Avcı

Pages : 286-299

View : 49 | Download : 52

Publication Date : 2025-08-18

Article Type : Research Paper

Abstract :This study examines the corporate cash holding decisions of publicly traded firms in 10 developing economies from 2009 to 2022, using both firm-specific and macroeconomic determinants. A fixed-effects panel data model was employed for the analysis. The findings indicate that firm size, cash flow, growth opportunities and profitability are positively associated with cash holdings, while leverage, working capital and capital expenditures exhibit a negative relationship. However, R&D expenses and macroeconomic factors, namely; GDP and inflation rate are found to have no significant impact on cash holdings of the selected firms. The findings related to size, leverage, cash flow, growth opportunities and capital expenditures are consistent with the assumptions of Pecking Order Theory (POT), where the first two factors also align with the predictions of Free Cash Flow Theory (FCFT). On the other hand, the influence of profitability, growth opportunities, and net working capital on corporate cash holding supports the predictions of Trade-Off Theory (TOT). This study contributes to the literature by providing insights into the dynamics of cash holdings in emerging economies, offering valuable perspectives for creditors, shareholders, and business managers. The findings highlight the importance of policies that strike a balance between effective cash management and investment efficiency to sustain financial performance.
Keywords : nakit tutma, gelişmekte olan ekonomiler, panel veri

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