Determinants of cash holdings: a study of Philippine listed firms

• Main Authors: Alberto, Audrey T., Javier, Rafael Alfonso B., Lopez, Eleazar N., Jr.
• Format: text
• Language: English
• Published: Animo Repository 2008
• Subjects: Cash flow > Accounting; Corporations > Philippines; Managerial accounting; Accounting
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/5752
• Institution: De La Salle University

This paper investigates the determinants of cash holdings for a sample of Philippine non-financial firms between 2003 and 2006. Cash is a double-edged blade that has both benefits and costs associated in it. using fixed effects model as estimation method, results indicate that growth opportunity, size, cash volatility, cash flow, non-cash liquid assets, leverage, bank relationship, managerial ownership, board independence and family ownership have significant impact to the level of cash holdings. Moreover, we found that there is a non-linear to cash holdings for leverage and managerail ownership. Divided policy is found not to be ralated to the level of cash holdings. Bank relationship has a positive impact which is explained by the importance of having stable related firms. Independent directors indeed mitigate exploitation and misappropriation of cash holdings. This paper supports the study of Albaum (2003) that Filipino managers are geared at being oriented towards advance planning. Overall, our empirical findings points that the Philippine corporate setting is characterized by firm-stability.