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This paper tests the causal relationship between bid ask spread and cash holding in the short and long run. It uses different proxy of corporate cash holding and test three proxies of a bid-ask spread. It also provides comprehensive and robust evidence for the causal relationship between cash holding and stock liquidity in an emergent market.

This study is based on a sample covering all financial and industrial firms in Tunisia’s stock market from 2008 to 2020. It uses a panel ARDL data approach to test the bi-directional relationship between cash holding and stock liquidity. This paper conducts rigorous statistical analysis of the collected data to test the hypothesized relationship between cash holding and bid-ask spread. This can involve running regression models, performing statistical tests, and analyzing the significance of the estimated coefficients.

Overall, paper’s findings provide empirical evidence supporting the bidirectional causal relationship between cash holding and bid-ask spread. The results highlight the importance of cash holding in determining stock liquidity and suggest that firms with higher cash holdings may face liquidity challenges. These findings have implications for corporate governance and can guide firms and regulators in improving stock liquidity and designing appropriate policies and recommendations.

Overall, the practical implications of this paper suggest that firms can enhance their stock liquidity by improving governance mechanisms and optimizing cash management strategies. Regulators can play a crucial role in creating a conducive market environment, and investors can take into account the relationship between cash holding and stock liquidity when making investment decisions.

We present empirical evidence of the relation causality between stock liquidity and cash holding. Our research is the first to test the bidirectional relationship between bid ask spread and cash holding in the short and long run. Overall, the originality of this paper lies in its exploration of the causal relationship between cash holding and bid-ask spread, the use of multiple proxies for stock liquidity, the examination of an emerging market context, the comparative analysis across sectors, and the practical implications for firms and regulators. These contributions add to the existing body of knowledge and provide new insights into the dynamics of cash holding and stock liquidity.

The present study aims to investigate the impact of the auditor’s opinion and internal control quality (ICQ) on future abnormal cash holdings for companies listed on the Tehran Stock Exchange (TSE).

Information about 216 companies in 2014–2021 was examined. This study used the absolute value of abnormal cash holdings to test the research hypotheses. However, future extra abnormal cash holdings and future deficit abnormal cash holdings were also tested. Modified multiple regression method and ordinary least squares (OLS) were used. The present study also applied the generalized method of moments (GMM) for endogeneity concerns.

The results showed that an unqualified audit opinion negatively and significantly affects a firm’s future abnormal cash holdings. Moreover, ICQ significantly strengthens the impact of an unqualified audit opinion on a firm’s future abnormal cash holdings. These results remained robust even after several robustness tests. This study tested the robustness of results through data division into the pre-COVID-19 and post-COVID-19 years. The test confirmed previous findings; however, the strength of these effects decreased in post-COVID-19 years.

Previous studies could not answer how an auditor’s opinion affects a company’s future abnormal cash holdings. Moreover, no empirical study has addressed the moderator role of ICQ in the relationship between unqualified audit opinion and future abnormal cash holdings. This study helps stakeholders evaluate the performance of firms more accurately, especially in any global health crisis such as the COVID-19 pandemic and similar crises. Combined with the research findings from developed countries, this study can potentially contribute to the global community’s efforts in advancing international objectives.

This study examines the impact of female directors on cash holdings in Egyptian listed firms, particularly in light of Decree 123/2019, which mandates female board representation. This study aims to determine if female directors mitigate agency conflicts related to cash holdings and how these dynamics shift post-quota implementation.

Using a panel fixed-effects model, the research analyzes 1,563 firm-year observations from 223 non-financial Egyptian firms listed on the EGX between 2014 and 2022. The robustness of the findings is tested through additional analyses using alternative proxies for cash holdings, different sample periods and a two-stage least squares approach to address endogeneity concerns.

This study finds a significant negative association between female directors and cash holdings, suggesting that female board members may promote more conservative cash management practices. However, this relationship weakens post-quota implementation, becoming statistically insignificant. This implies that while quotas increase female representation, they do not necessarily enhance corporate governance effectiveness regarding cash management. The pre-quota positive link between female directors and excess cash holdings also becomes insignificant post-quota.

The study focuses on female directors’ impact on cash holdings, excluding potential effects on other board subcommittees or functions. It does not capture long-term benefits of increased female representation, which may emerge as the pool of qualified female directors grows. Future research should explore broader implications of gender diversity guidelines and other diversity dimensions across various corporate governance aspects and institutional contexts.

This research provides empirical evidence from an emerging market context on the understudied impact of gender diversity on cash holdings. It critically evaluates the unintended consequences of mandatory gender quotas, highlighting the complexity of regulatory interventions in corporate governance. The study stresses the need for policymakers to address factors limiting the effectiveness of such quotas and to consider potential suboptimal outcomes when increasing female board representation without a corresponding increase in the supply of qualified female directors.

This paper empirically investigates (1) the association between business strategy and abnormal cash position and (2) the future performance implications of abnormal cash holdings conditional on business strategy for a sample of US firms.

We use the firm-specific composite business score developed by Bentley et al. (2013) and examine its relationship with abnormal cash holdings. We employ the cash holding model of Opler et al. (1999) to determine the level of normal cash holdings with the residual being labeled as the abnormal cash holdings.

Using a sample of US firms, we confirm a positive and significant association between business strategy and abnormal cash holdings. We also reveal that a deviation from the estimated cash level can lead to an improved future performance but a prospector (defender) -type business strategy weakens (strengthens) the excess cash–firm performance relationship.

While the prior evidence show the effects of business strategies on corporate cash holding, there is no evidence of the association between business strategy and abnormal cash holdings and the performance implications of the strategy-cash holdings nexus. Hence, through the lens of business strategy, this study aims to fill this gap in the literature.

We examine the impact of corporate sustainability performance (CSP) on corporate cash holdings, focusing on the moderating impacts of industry’s concentration, financial constraints, and institutional environments.

The empirical analysis is conducted on a sample of 31 countries from 2002 to 2018. We use the pooled OLS regressions controlling for fixed effects. We further address endogeneity issues using an instrumental variable approach, the Difference-in-Differences regression based on an exogenous shock, and the propensity score matching.

We find that firms with superior CSP hold more cash. This result is valid after a series of tests for robustness and endogeneity issues, suggesting a causal effect of CSP on corporate cash holdings. In the cross section, the positive impact of CSP on cash holdings is more pronounced for firms operating in highly concentrated industries, but attenuated for firms with financial constraints and for those operating in countries with better institutional environments. We further show that CSP affects cash holdings through the channel of financial distress risk.

In making investment decisions, investors should not only examine corporate financial performance and sustainability profile, but also understand the related cash holding levels and financial distress costs. Corporate managers making decisions on levels of cash holdings should pay more attention to their sustainability behavior, especially for firms operating in concentrated industries and/or facing financial constraints. Governments and authorities can apply regulations to encourage firms to engage more in sustainable activities, as well as establish good institutional environments in the country.

Using a comprehensive international dataset, our paper contributes to two strands of literature: the economic impact of CSP and the driver of cash holdings. We further focus on the moderating role of industry concentration and firms’ financial constraints. Our international sample also allows us to exploit the effect of country-level informal institutions.

This paper aims to investigate the importance of profitability and bank soundness as determinants of cash holdings by Islamic Rural Bank (IRB) in Indonesia.

The study covers 134 IRB during 2012–2016. The authors apply pooled regression and panel data method. The best model is used for further analysis.

The maximum cash holding is 22.21%, meaning the bank retains 22.21% of its liabilities in the cash vault. Cash holding is positively related to higher credit risk (LLR), soundness and profitability (ROA) and negatively to asset composition (PATA) and size (LASSET) for Model I. Soundness, asset composition (PATA), higher credit risk (LLR) and profitability (ROA) are negatively related to size. Larger IRB hold less cash as it has a better reputation in the market. The intermediation level (financing deposit ratio) is positive and significant for Model 1 but negative and not significant for Model 2. Different measures of liquidity ratio – cash to liabilities (CR) or cash to capital ratio (CCR) – produce different results. Evidence from multivariate analysis reports that the results from both models are mostly in the opposite direction.

To the best of the authors’ knowledge, this paper is the first attempt to look at cash holding in the IRB in Indonesia.

The purpose of the study is to examine factors influencing cash holding of firms during periods of crisis. In recent times, the level of cash holdings in firms has seen a steady rise across industries for diverse reasons. However, the need to study cash holding becomes even more compelling during geopolitical instability as it causes firms to hold greater cash reserves for precautionary reasons.

This paper systematically reviews literature from 1984 to 2024 by organising the findings thematically based on the relationship between corporate cash holdings (CCH) and firm performance in times of war. The paper used 47 research articles from the Scopus database and Google Scholar. Literature connected to CCH, firm performance and war times was explored. The title and abstract analysis were conducted using VOSviewer software. As a result, the predetermined body of literature was visualised, and six theme-based clusters were identified.

This paper systematically reviews empirical studies, categorising them into six theme-based groups. These clusters encompass CCH and Determinants, Optimal Cash Holding Levels, Cash Holding Adjustment Speed and Theory, Cash Holding and Firm Value, Cash Holding and Firm Performance, Cash Holding in the Context of the Ukraine War and the adaptive financial strategies of firms in response to economic conditions by using cash holding as a hedging instrument. Inflation prompts adjustments in cash-holding strategies at a macro level. During crises, lower interest rates lead to increased cash holdings. Various motives influence firms’ cash-to-assets ratios. According to the pecking order theory, geopolitical risk negatively affects cash holdings. Exposure to pandemics prompts an increase in cash reserves. War shocks have a profound impact on economies, markets and stability; hence, geographic diversification can reduce the need for precautionary cash. In times of uncertainty, the financial stress of firms can get elevated, and therefore, having a well-diversified geographical portfolio of a firm’s investments can aid in meeting any financially distressing situation.

The literature on CCH has been phenomenal. This paper attempts to structure the issues surrounding cash holding and firm performance in wartime, like the Ukraine war, using the VOSviewer software. This study endeavours to highlight the reasons for cash holding during crises and understand how cash holding affects firm performance. Finally, this paper also tries to comprehend whether cash holding helps as a hedging instrument in times of war.

This paper aims to investigate the relationship between uncertainty and corporate cash holdings with the moderating role of political connections.

We employ fixed effects estimation on a panel dataset of 669 Vietnamese listed firms over the 2010–2020 period, with one- and two-way standard error clustering. We conduct various robustness tests, including two-stage least squares/instrumental variable and generalized method of moments regressions, alternative cash holding measure, and additional controls for macroeconomic conditions and ownership types.

The effect of uncertainty on cash holdings is weakened for firms with political connections relative to those without the connections. Although general firms depend on cash flows to adjust their cash holding behavior when uncertainty increases, our findings suggest that politically connected firms do not rely on internal cash flows to accumulate cash when confronted high uncertainty.

Our findings on the role of political connections in moderating the relationship between cash holding and economic policy uncertainty have practical implications for policymaking. Since political connections serve as a buffer for a firm’s liquidity, firms may want to seek those connections, which can, in turn, lead to increasing informal costs and unfair business environment.

This is the first study investigating the role of political connections to the nexus of cash, cash flow and uncertainty, providing novel evidence regarding the less dependence on internal cash flows to save cash by politically connected firms. Second, the paper enriches the literature on the motives of cash holdings by proposing a modified agency view in the context of weak investor protection. Therefore, our findings strengthen the explanation for the positive effect of uncertainty on firms’ cash holdings in emerging markets.

This study aims to examine the relationship between CEO characteristics and the value of excess cash holdings from the perspective of resource-based view (RBV) theory in the context of Malaysia.

The analyses were made using ordinary least squares across 173 non-financial firms listed in Bursa Malaysia over the period of 2015–2021. The authors address potential endogeneity through the generalized method of moments. The results are also robust to alternative measures of excess cash holdings.

The results showed that female CEOs and CEOs’ educational level are significantly positively related to the value of excess cash holdings. In contrast, CEO tenure and CEO age negatively affect a firm’s excess cash valuation. The results are robust to measurement error and endogeneity issues.

The empirical results have useful policy implications. For practitioners, firms are recommended to prioritize the selection of female CEOs and CEOs with high education levels within their top management, as this initiative can result in improved value associated with excess cash holdings. In addition, policymakers are recommended to guide programs that attempt to improve educational attainment and gender diversity in business leadership. This study also provides investors with insightful information about the possible relationship between CEO traits and company performance, especially with regard to measures for managing surplus capital.

To the best of the authors’ knowledge, this study is the first to explore the role of CEO characteristics in the value of excess cash holdings based on the RBV theory.

This study aims to examine the influence of geopolitical risk (GPR) on corporate cash holdings in an emerging market, India. It also investigates whether the effect of GPR on cash holdings varies across financially constrained and unconstrained firms, and across the different sectors.

This study uses the fixed-effect regression model to examine the effect of GPR on the corporate cash holdings of 2090 Indian firms from 2003 to 2021. To correct the potential endogeneity issue and ensure the robustness of the results, this study uses two-stage least squares regression, alternative cash holdings proxies, GPR measures and across the different periods (Global financial crisis and COVID-19).

The paper finds that GPR has a positive impact on the cash holdings of Indian firms. The authors also find that the positive relationship between GPR and cash holdings is consistent for financially constrained and unconstrained firms. Furthermore, the results also show that firms in the construction sector maintain higher cash reserves than other sectors.

To the best of the authors’ knowledge, this study is one of the first-ever studies which examines the effect of GPR on corporate cash holding for an emerging economy like India. The use of alternative measures of cash holding, GPR, and estimation methods make this study more robust.