Cash holdings and firm performance relationship: Do firm-specific factors matter?

Jiang Yun, Hassan Ahmad, Khalil Jebran and Sher Muhammad

Economic Research-Ekonomska Istraživanja, 2021, vol. 34, issue 1, 1283-1305

Abstract: This study shows how the relationship between cash holdings and firm performance is moderated by several firm-specific factors such as state-ownership, corporate governance attributes, family ownership, and ownership concentration. By considering a sample of Chinese firms, this study provides strong evidence that the cash holdings and performance association is significantly moderated by firm-specific attributes. Specifically, this study documented that cash holdings improve the performance of firms having strong corporate governance. Further, family ownership and ownership concentration negatively affect the relationship between cash and performance, while state-ownership positively moderates this relationship. Overall, the findings elaborate that firm-specific attributes are important factors influencing the association between cash holdings and firm performance.

Date: 2021
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DOI: 10.1080/1331677X.2020.1823241

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