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Cash Holdings: Determining Factors and Impact on Future Operating Performance for Listed versus Unlisted Firms

Author

Listed:
  • Seraina C. Anagnostopoulou

    (Department of Accounting and Finance, Athens University of Economics and Business, 76, Patission St. Athens, 10434, Greece)

Abstract

Research suggests that the cash ratios of private firms are lower than the ones of public firms, which is not consistent with an expectation for increased importance of the precautionary motive for firms with fewer funding options. The study provides a significant explanation on these lower ratios, attributed to differences in leverage, capital expenditures, internally generated cash flows, and corporate governance. The study finally testifies that excess cash holdings are positively associated with future operating performance for private, but not public firms, a finding which is interpreted as a manifestation of capital raising constraints for unlisted versus listed firms.

Suggested Citation

  • Seraina C. Anagnostopoulou, 2013. "Cash Holdings: Determining Factors and Impact on Future Operating Performance for Listed versus Unlisted Firms," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 16(02), pages 1-47.
    • Handle: RePEc:wsi:rpbfmp:v:16:y:2013:i:02:n:s0219091513500136
    DOI: 10.1142/S0219091513500136
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    Citations

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    Cited by:

    1. Yacine Belghitar & Ephraim Clark & Abubakr Saeed, 2019. "Political connections and corporate financial decision making," Review of Quantitative Finance and Accounting, Springer, vol. 53(4), pages 1099-1133, November.
    2. Thang Nguyen & Charlie X. Cai & Patrick McColgan, 2017. "How firms manage their cash flows: an examination of diversification’s effect," Review of Quantitative Finance and Accounting, Springer, vol. 48(3), pages 701-724, April.
    3. Ashwin Madhou & Imad Moosa & Vikash Ramiah, 2015. "Working Capital as a Determinant of Corporate Profitability," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-17, December.
    4. Efstathios Magerakis & Konstantinos Gkillas & Athanasios Tsagkanos & Costas Siriopoulos, 2020. "Firm Size Does Matter: New Evidence on the Determinants of Cash Holdings," JRFM, MDPI, vol. 13(8), pages 1-35, July.
    5. Hai-Chin Yu & Ben Sopranzetti & Cheng-Few Lee, 2015. "The impact of banking relationships, managerial incentives, and board monitoring on corporate cash holdings: an emerging market perspective," Review of Quantitative Finance and Accounting, Springer, vol. 44(2), pages 353-378, February.
    6. Greg Filbeck & Xin Zhao & Ryan Knoll, 2017. "An analysis of working capital efficiency and shareholder return," Review of Quantitative Finance and Accounting, Springer, vol. 48(1), pages 265-288, January.

    More about this item

    Keywords

    Cash policy; private firms; liquidity; performance;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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