AN ANALYSIS REGARDING CASH HOLDINGS. EMPIRICAL STUDY ON THE BUCHAREST STOCK EXCHANGE LISTED FIRMS

• Published in: Scientific Annals of Economics and Business Vol. 64; no. 3; pp. 289 - 306
• Main Authors: Nenu, Elena Alexandra, Vintila, Georgeta
• Format: Journal Article
• Language: English
• Published: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi 01-10-2017; The Publishing House of the Alexandru Ioan Cuza University of Iasi; De Gruyter Open; Editura Universităţii „Alexandru Ioan Cuza” din Iaşi / Alexandru Ioan Cuza University of Iasi Publishing house
• Subjects: Business Economy / Management; C23; cash flow; cash holdings; Economy; Financial Markets; G31; L25; leverage; liquidity; leverage; cash holdings; liquidity; cash flow
• ISSN: 2501-1960; 2501-3165; 2501-3165
• DOI: 10.1515/saeb-2017-0019

Worldwide corporate cash holdings have significantly increased and have become an important tool for managers. This study explores the factors that influence firms’ behavior regarding cash holdings and the signal that financial conservatism is sending to potential investors. Our data consists in annual observations collected through the Reuters Eikon platform. It includes companies listed on the Bucharest Stock Exchange, the investigated period being 2005-2014. The econometric analysis employs multivariate regression for an unbalanced panel data, using the OLS technique. The results show a positive correlation of cash holdings with the value registered by this indicator in the previous period, fact that might be interpreted as an attempting of the companies to maintain a target level of cash. Also, the results showed a non-linear relationship between leverage and cash holdings, while the tangible assets determine a negative correlation. As regards firm size and ownership concentration, the correlations were not statistically validated.