Corporate Internationalization and Uncertainty of Cash Holdings: Evidence from an Emerging Market

Mirza Hammad Hassan, Hussain Haroon (), Sarwar Ghulam and Habib Haroon
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Mirza Hammad Hassan: Malik Firoz Khan Noon Business School, University of Sargodha, Sargodha, Pakistan.
Hussain Haroon: Malik Firoz Khan Noon Business School, University of Sargodha, Sargodha, Pakistan.
Sarwar Ghulam: Malik Firoz Khan Noon Business School, University of Sargodha, Sargodha, Pakistan.
Habib Haroon: The Eminent Group Colleges, Sargodha, Pakistan.

Zagreb International Review of Economics and Business, 2024, vol. 27, issue 1, 79-95

Abstract: Purpose – The purpose of this study is to investigate the empirical relationship between corporate internationalization and uncertainty of cash holding in non-financial listed companies of Pakistan. Secondly, the effect of cash flow, size of firm and capital expenditure on uncertainty of cash is also explored. Design/Methodology/Approach - A panel data of 100 companies over the period starting from 2011 to 2018 is collected from the published annual reports. Data is analyzed using pooled and panel OLS regression. For robustness of results dynamic GMM is used. Findings - The estimated results show a significant negative relationship between corporate internationalization and uncertainty of cash holdings. Moreover, large size firms tend to represents a relatively more stable cash balance as compared to small size firms. Practical Implications - The study concludes that firms engage in international operations are in better position to access external capital market and are able to stabilize their liquidity. Originality/Value – This study uses 3 years standard deviation of cash instead of conventionally used absolute change in cash balance to measure uncertainty of cash. This study is among the first studies to examine such sort of relationships in an emerging economy. Further, for robustness of results dynamic panel GMM is applied.

Keywords: Corporate internationalization; Uncertainty of cash; Panel data analysis; Dynamic panel GMM; R-Studio syntax (search for similar items in EconPapers)
JEL-codes: G32 H63 H81 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:zirebs:v:27:y:2024:i:1:p:79-95:n:1004

DOI: 10.2478/zireb-2024-0004

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