The Determinant Of Cash Holding

Dini Wahjoe Hapsari; Nabila Roma Norris

doi:10.24912/ja.v26i3.960

Authors

Dini Wahjoe Hapsari Faculty of Economic and Business, Telkom University, Bandung, Indonesia
Nabila Roma Norris Faculty of Economic and Business, Telkom University, Bandung, Indonesia

DOI:

https://doi.org/10.24912/ja.v26i3.960

Keywords: Cash Holding; Investment Opportunity Set; Net Working Capital; Profitability.

Abstract

This study examines the effect of investment opportunity sets, net working capital, and profitability on cash holding. Cash holding is a liquid asset that has the benefits of supporting the company in the company's routine operational activities. The application of cash holding in a company can be influenced by investment opportunities, net working capital, and profitability. From 2016 to 2021, the research population consists of food and beverage companies listed on the Indonesia Stock Exchange. The research sample uses purposive sampling, so there are 15 companies. The study uses secondary data by collecting the company's annual report the data analysis method used in Panel Data Regression utilising the Eviews version 9 application. The results indicate that the investment opportunity set, net working capital, and profitability simultaneously affect cash holding. Partially, only the location of investment opportunities affects cash holding. Meanwhile, net working worth and profitability do not affect cash holding.

Author Biographies

Dini Wahjoe Hapsari, Faculty of Economic and Business, Telkom University, Bandung, Indonesia

dinihapsari@telkomuniversity.ac.id

Nabila Roma Norris, Faculty of Economic and Business, Telkom University, Bandung, Indonesia

nabilarnrom@student.telkomuniversity.ac.id

References

Al-Najjar, B. (2013). The financial determinants of corporate cash holdings: Evidence from some emerging markets. International Business Review, 22(1), 77–88. https://doi.org/10.1016/J.IBUSREV.2012.02.004.

Al-Najjar, B., & Clark, E. (2017). Corporate governance and cash holdings in MENA: Evidence from internal and external governance practices. Research in International Business and Finance, 39, 1–12. https://doi.org/10.1016/J.RIBAF.2016.07.030.

Arfan, M., Basri, H., Handayani, R., Shabri, M., Fahlevi, H., & Dianah, A. (2017). Determinants of Cash Holding of Listed Manufacturing Companies in the Indonesian Stock Exchange. DLSU Business & Economics Review, 26(2), 1–12.

Basuki, A. T. R. I., & Prawoto, N. (2016). Analisis Regresi Dalam Penelitian Ekonomi dan Bisnis. PT Rajagrafindo Persada, Depok, 1–239.

Farinha, J., Mateus, C., & Soares, N. (2018). Cash holdings and earnings quality: evidence from the Main and Alternative UK markets. International Review of Financial Analysis, 56, 238–252. https://doi.org/10.1016/J.IRFA.2018.01.012.

Gill, A., & Shah, C. (2012). Determinants of Corporate Cash Holdings: Evidence from Canada. International Journal of Economics and Finance, 4(1). https://doi.org/10.5539/ijef.v4n1p70.

Guizani, M. (2017). The financial determinants of corporate cash holdings in an oil rich country: Evidence from Kingdom of Saudi Arabia. Borsa Istanbul Review, 17(3), 133–143. https://doi.org/10.1016/J.BIR.2017.05.003.

Keynes, J. M. (1937). The general theory of employment. Quarterly Journal of Economics, 51(2), 209–223. https://doi.org/10.2307/1882087.

Kim, J., Kim, H., & Woods, D. (2011). Determinants of corporate cash-holding levels: An empirical examination of the restaurant industry. International Journal of Hospitality Management, 30(3), 568–574. https://doi.org/10.1016/J.IJHM.2010.10.004.

Lukman, M. (2018). KEUANGAN KORPORAT: Teori dan Praktik di Indonesia (R. A. Kusumaningtyas (ed.)).

Martínez-Sola, C., García-Teruel, P. J., & Martínez-Solano, P. (2018). Cash holdings in SMEs: speed of adjustment, growth and financing. Small Business Economics 2018 51:4, 51(4), 823–842. https://doi.org/10.1007/S11187-018-9990-Y.

Morais, F., Nave, A., & Rodrigues, R. G. (2019). Cash Holdings Determinants from Brazilian Listed Firms. Lecture Notes in Electrical Engineering, 505, 1043–1050. https://doi.org/10.1007/978-3-319-91334-6_144.

Ross, S. A., Jordan, B. D., & Westerfield, R. W. (2015). Essential of Corporate Finance. The McGraw-Hill.

Sari, D. M., & Ardian, A. (2019). Cash Holding, Cash Flow dan Profitability: Studi pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia. Jurnal Dinamika Akuntansi Dan Bisnis, 6(1), 29–38. http://www.jurnal.unsyiah.ac.id/JDAB/article/view/12142.

Sekaran, U., & Bougie, R. (2017). Metode Penelitian Untuk Bisnis. In D. A. Halim (Ed.), John Wiley & Sons (6th ed.). Penerbit Salemba Empat.

Thakur, B. P. S., & Kannadhasan, M. (2019). Corruption and cash holdings: Evidence from emerging market economies. Emerging Markets Review, 38, 1–17. https://doi.org/10.1016/J.EMEMAR.2018.11.008.

ur Rehman, A., & Wang, M. (2015). Corporate Cash Holdings and Adjustment Behaviour in Chinese Firms: An Empirical Analysis Using Generalized Method of Moments. Australasian Accounting, Business and Finance Journal, 9(4), 20–37. https://doi.org/10.14453/aabfj.v9i4.3.

Wiyono, G., & Kusuma, H. (2017). Manajemen Keuangan Lanjutan Berbasis Corporate Value Creation. UPP STIM YKPN.

Ye, Y. (2018). A Literature Review on the Cash Holding Issues. Modern Economy, 9(6), 1054–1064. https://doi.org/10.4236/ME.2018.96068.