The effect of cash holdings on firm performance in large Italian companies. (8th October 2018)

• Record Type: Journal Article
• Authors: La Rocca, Maurizio; Cambrea, Domenico Rocco
• Is Part Of: Journal of international financial management & accounting. Volume 30:Number 1(2019)
• Page Start: 30
• Page End: 59
• Publication Date: 2018-10-08
• Subjects: cash holdings -- cash stock -- corporate liquidity -- firm performance -- moderating factors; International business enterprises -- Finance -- Periodicals; International finance -- Periodicals; Managerial accounting -- Periodicals; Electronic journals; 658.15
• DOI: 10.1111/jifm.12090
• Languages: English
• ISSNs: 0954-1314

Abstract

Abstract: This paper examines the relationship between cash holdings and performance in Italy over 36 years. Specifically, in light of the presence of conflicting evidence concerning the worth of cash stock, which could lead to a positive effect rather than a negative one, the role of moderating factors that can shape the magnitude of this relationship is investigated. The results show that the value of cash holdings is affected by firm‐specific characteristics, as well as factors related to the institutional context. Although other studies have analyzed moderators one at a time, this is the first work to consider how they jointly work. When the moderators are considered together, some of them become no longer statistically significant while others become even more economically and statistically relevant.