The financial determinants of corporate cash holdings

Evidence from some emerging markets

Research output: Contribution to journalArticle

46 Citations (Scopus)

Abstract

This paper investigates corporate cash holdings in developing countries. In particular, we look into the effect of capital structure and dividend policy on cash holdings in Brazil, Russia, India, and China and compare our results with a control sample from the US and the UK. Our sample contains 1992 firms across these countries for the period 2002–2008. We employ Instrumental Variables analysis to control for the endogeneity of the financial policies (cash holdings, capital structure, and dividend policy). Our results show some evidence that capital structure and dividend policy affect cash holdings. There are similarities between developed and developing countries on the factors determining corporate cash holdings. The results of our cross-country model provide evidence that capital structure, dividend policy, and firm size are important factors in determining cash holdings. Finally, we show that firms operating in countries with low shareholder protection hold more cash.
Original languageEnglish
Pages (from-to)77-88
Number of pages12
JournalInternational Business Review
Volume22
Issue number1
Early online date27 Mar 2012
DOIs
Publication statusPublished - Feb 2013
Externally publishedYes

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Cash holdings
Emerging markets
Dividend policy
Capital structure
Developing countries
Factors
Firm size
Endogeneity
Shareholder protection
BRIC countries
Instrumental variables
Cash
Financial policy
Developed countries

Cite this

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The financial determinants of corporate cash holdings : Evidence from some emerging markets. / Al-Najjar, Basil.

In: International Business Review, Vol. 22, No. 1, 02.2013, p. 77-88.

Research output: Contribution to journalArticle

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