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http://dx.doi.org/10.13106/jafeb.2021.vol8.no6.0661

Determinants of Corporate Cash Holdings Among Asia's Emerging and Frontier Markets: Empirical Evidence from Non-Financial Sector  

BAGH, Tanveer (Faculty of Management Sciences, Riphah International University Islamabad)
KHAN, Muhammad Asif (Department of Commerce, Faculty of Management Sciences, University of Kotli AJ&K)
MEYER, Natanya (DHET-NRF SARChI Entrepreneurship Education, Department of Business Management, University of Johannesburg)
SADIQ, Rashid (Faculty of Management Sciences, Riphah International University Islamabad)
KOT, Sebastian (Management Faculty, Czestochowa University of Technology, DHET-NRF SARChI Entrepreneurship Education, Department of Business Management, University of Johannesburg)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.6, 2021 , pp. 661-670 More about this Journal
Abstract
The determinants of Corporate Cash Holdings (CCH) have been a deep-seated debate among institutions and scholars over the last couple of years. Therefore, this paper aims to investigate the determinants of CCH among emerging and frontier markets (Bangladesh, China, India, Pakistan). Due to endogeneity, the generalized methods of moments (GMM) methodology was applied to capture the impacts of different variables, including profitability, firm size, financial leverage growth opportunity, dividend payout, and the business cycle on CCH. The result shows that the firm's size positively enhances CCH in emerging and frontier markets. Growth opportunity is negatively influenced by CCH in the case of Bangladeshi firms while a positive driver in emerging markets. The business cycle has a negative bearing on CCH across Pakistan, India, and Bangladeshi firms while positive and significant in Chinese firms. Financial leverage and dividend payout were positive determinants of CCH in Chinese firms, while they appear negative for Pakistan, India and Bangladeshi firms. Finally, profitability has a positive and significant impact on CCH in frontier and emerging markets. The study contributes to the incumbent determinants of CCH literature by introducing a fresh outlook and offering policy insights helpful in emerging and frontier markets perspectives.
Keywords
Corporate Cash Holdings; Emerging Markets; Growth Opportunity; Firm Size; Financial Leverage;
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