Business and Economic Horizons

  Previous Article | Back to Volume | Next Article
  Abstract | References | Citation | Download | Preview | Statistics
Volume 14
Issue 3
Online publication date 2018-06-14
Title Determinants of corporate cash holding: evidence from UK listed firms
Author Phi Long Tran, Thu Phuong Ta, Duy Minh Vu, Duc Hoang Le
Abstract
Our paper revisits the determinants of company cash holding. It attempts to explain the cash holding behavior of firms’ managers by investigating non-financial companies listed on the London Stock Exchange from 2011 to 2016. Our results indicate that firm size, leverage, cash flow, cash flow volatility, and investment opportunity exert influence on such cash holding behavior. It can be explained by the trade-off theory, the pecking-order theory and free cash flow theory. Our results may shed light on the decrease in the cash holding level for the post-crisis period.
Citation
References
Bates, T. W., Kahle, K. M., & Stulz, R. M. (2009). Why do US firms hold so much more cash than they used to? The Journal of Finance, 64(5), 1985-2021.

Bigelli, M., & Sanchez-Vidal, J. (2012). Cash holdings in private firms. Journal of Banking and Finance, 36(1), 26-35.

Bover, O., & Watson, N. (2005). Are there economies of scale in the demand for money by firms? Some panel data estimates. Journal of Monetary Economics, 52(8), 1569-1589.

Chang, K., & Noorbakhsh, A. (2009). Does national culture affect international corporate cash holdings? Journal of Multinational Financial Management, 19(5), 323-342

Chan, S. P. (2015). Britain on top: Recovery from Great Recession was faster than thought. Retrieved May 14, 2018, from http://www.telegraph.co.uk/finance/economics/11900934/UK-GDP-growth-stronger-previously-though-recovery-ONS.html

Fama, E. F., & MacBeth, J. D. (1973). Risk, return, and equilibrium: empirical tests. Journal of Political Economy, 81(3), 607-636.

Faulkender, M. W. (2002). Cash holdings among small business. Retrieved 15 May, 2018, from https://ssrn.com/abstract=305179. http://dx.doi.org/10.2139/ssrn.305179.

Ferreira, M. A., & Vilela, A. S. (2004). Why do firms hold cash? Evidence from EMU countries. European Financial Management, 10(2), 295-319.

Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323-329.

Kim, C. Mauer, D. C., & Sherman, A. E. (1998). The determinants of corporate liquidity: Theory and evidence. Journal of Financial and Quantitative Analysis, 33(3), 335-359.

Harford, J., Mansi, S. A., & Maxwell, W. F. (2012). Corporate governance and firm cash holdings in the US. In Corporate Governance (pp. 107-138). Springer Berlin Heidelberg.

Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147-175.

Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.

Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of Financial Economics, 52(1), 3-46.

Ozkan, A., & Ozkan, N. (2004). Corporate cash holdings: An empirical investigation of UK companies. Journal of Banking & Finance, 28(9), 2103-2134.

Pinkowitz, L., & Williamson, R. (2001). Bank power and cash holdings: Evidence from Japan. The Review of Financial Studies, 14(4), 1059-1082.

Keywords Cash holding, trade-off theory, pecking order theory, free cash flow theory
DOI http://dx.doi.org/10.15208/beh.2018.40
Pages 561-569
Download Full PDF Download
  Previous Article | Back to Volume | Next Article
Share
Search in articles
Statistics
Journal Published articles
BEH 558
Journal Hits
BEH 1135583
Journal Downloads
BEH 41315
Total users online -