The financial determinants of corporate cash holdings in an oil rich country: Evidence from Kingdom of Saudi Arabia

Muncef Guizani

Borsa Istanbul Review, 2017, vol. 17, issue 3, 133-143

Abstract: This paper investigates the determinants of the cash holdings for a sample of Saudi firms over the period 2006–2014, using static and dynamic panel models. Our results show that leverage, firm size, capital expenditure, net working capital and cash flow volatility are important in determining cash holdings. When we divide our sample into two sub-samples: petrochemical and non-petrochemical firms, our results show a significant difference between the determinants of cash holdings of the two groups of firms. We also investigate the characteristics of high liquid firms (conservative firms). The results indicate that conservative firms are less leveraged, have large size, have low investment expenditures and have low cash flow fluctuation. Furthermore, dynamic panel estimation indicates that Saudi firms adjust their liquidity holdings quickly towards an endogenous target cash ratio.

Keywords: Cash holdings; Petrochemical firms; Conservative firms (search for similar items in EconPapers)
JEL-codes: G30 G32 G39 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2214845017300017 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bor:bistre:v:17:y:2017:i:3:p:133-143

Access Statistics for this article

More articles in Borsa Istanbul Review from Research and Business Development Department, Borsa Istanbul Contact information at EDIRC.
Bibliographic data for series maintained by Ahmet Palu ().