Financial Drivers of Corporate Cash holdings and its Implications: Evidence from Pakistan Stock Exchange

Authors

Nadia Nazeer

PhD Scholar, Department of Commerce, Bahauddin Zakariya University, Multan, Punjab, Pakistan

Dr. Nadeem Ahmed Sheikh

Associate Professor, Institute of Management Sciences, Bahauddin Zakariya University, Multan, Punjab, Pakistan

Prof. Dr. Muhammad Hanif Akhter

Chairperson, Department of Commerce, Bahauddin Zakariya University, Multan, Punjab, Pakistan

DOI: https://doi.org/10.35484/pssr.2021(5-IV)03

Keywords

Corporate Cash Firm Value Growth Leverage Net Working Capital Profitability

Abstract

The study inspects corporate cash holding behavior of firms listed at Pakistan Stock Exchange during 2013 to 2018. More specifically, we look into the financial determinants of corporate cash holdings and its impact on firm value during 2013 to 2018.Furthermore, the study investigates which of the theories imply in Pakistani firms regarding corporate cash holding behavior. The study identifies that among financial variables profitability, liquidity, growth, dividend and age have positive significant relationship while leverage and size are showing significant negative relationship with corporate cash holdings. Our study results imply Theory of Pecking Order. Furthermore, value of the firm is being significantly affected by the corporate cash holdings.