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Factors explaining the decision to hold liquid assets: dynamic analysis of Tunisian listed companies

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  • Mongi Gharsellaoui

Abstract

In this paper, our aim is to study the factors that explain the decision to hold liquid assets. To this end, we examine a sample of 20 Tunisian companies listed on the stock exchange during the 2006–2015 periods. Specifically, we estimate a dynamic panel model that links change in liquidity holdings and some variables that may affect liquidity. The results indicate that companies opt for liquidity as a precaution for a possible financing need, mainly if these companies have difficulty accessing external financing sources. For a company, holding liquidity has two advantages: it allows them to easily cover their obligations and future investments and to retain some of its financial assets.

Suggested Citation

  • Mongi Gharsellaoui, 2020. "Factors explaining the decision to hold liquid assets: dynamic analysis of Tunisian listed companies," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 39(1/2), pages 149-162.
    • Handle: RePEc:ids:ijesbu:v:39:y:2020:i:1/2:p:149-162
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