Factors influence Corporate Cash Holdings - Empirical Evidence From Textile Industry of Bangladesh
DOI:
https://doi.org/10.18533/ymw0j575Keywords:
corporate cash holdings, profitability, net working capitalAbstract
Background: Cash is the most readily available asset that acts like the lifeblood that keeps businesses running. Cash holdings are immaterial in a world of efficient capital markets because corporations may readily raise cash to finance lucrative investment projects at low transaction costs. As a result, shareholder wealth remains unaffected as the corporation invests in liquid assets.
Purpose: This paper aims to investigate the determining factors of corporate cash holdings in the textile sector of Bangladesh.
Method: A longitudinal cross-sectional panel data set of 53 Bangladeshi textile companies from 2012 to 2021 was analyzed using several statistical approaches, including multiple discriminant regression.
Findings: The findings imply that corporate cash holding is influenced by firm-level (i.e., profitability, capital expenditure, fund flow from operation, net working capital, growth opportunity, leverage, dividend, firm age, and firm size) and macroeconomic factors (i.e., GDP, inflation).
Contributions and Implications: From an academic standpoint, this paper adds to our understanding of the cash holding level in emerging markets like Bangladesh. The study's findings may have significant practical implications for creditors, governments, regulators, and other stakeholders to create reliable credence about a company’s financial condition.
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