Does ownership matter in corporate cash holdings? Evidence from an emerging market

Thi Hong An Thai and Minh Tri Hoang

Journal of Economics and Development, 2024, vol. 26, issue 2, 123-138

Abstract: Purpose - Using imbalanced panel data of nonfinancial Vietnamese listed firms from 2005 to 2021, this paper explores the potential effect of ownership on firms' cash levels. Design/methodology/approach - Two hypotheses are tested using different methods, including pooled ordinary least squares (POLS) and system-generalized method of moments (GMM), to investigate the ownership–cash holding relationship for various firm scenarios. Both book and market measures of the cash ratio are examined. Findings - Results show that foreign and state ownership encourages firms to increase their cash reserves. The positive relationship between ownership and cash holding is, especially, pronounced for firms in the financial deficit. Research limitations/implications - This research suggests that in this emerging market, outside ownership substantially accelerates cash to hedge against the unexpected issues caused by poor investor protection, low political accountability and information asymmetry. Originality/value - The study contributes to the existing understanding of the relationship between ownership and corporate cash holdings in the context of a typical emerging market. Besides, it expands the existing knowledge to the extent of such relations in the event of a financial shortage.

Keywords: Foreign ownership; State ownership; Cash holding; Budget deficit; D22; G32; H70; O16; O53 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (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:eme:jedpps:jed-09-2023-0168

DOI: 10.1108/JED-09-2023-0168

Access Statistics for this article

Journal of Economics and Development is currently edited by Prof Dr Le Quoc Hoi

More articles in Journal of Economics and Development from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().