Determinants of cash holdings in private firms

ǂthe ǂcase of the Slovenian SMEs

Marija Angelovska (Author), Aljoša Valentinčič (Author)

Abstract

This paper examines the determinants of cash holdings in a large sample of the Slovenian small and medium sized companies in the period 2006-2013. The empirical results provide support for the transactions and precautionary motives in the cash policies of the analysed SMEs. However, we find evidence in favour of the speculative motive as well, by ascertaining that smaller, exporting and more profitable firms hold more cash. The paper also establishes that the net working capital and financial debt can be considered as cash substitutes and that keeping close relationships with banks reduces agency costs and information asymmetries and leads to lower cash levels. In addition, the ability to internally generate funds expressed as higher operating cash flow reduces the amounts of cash held. Finally, evidence shows that longer cash conversion cycles and requirements for mandatory retirement benefit contributions result in higher cash balances, while weaker empirical support is found also for the negative influence of the interest rate level on cash holdings.

Keywords

Slovenia;SMEs;cash flows;liquidity;

Data

Language:	English
Year of publishing:	2020
Typology:	1.01 - Original Scientific Article
Organization:	UL EF - Faculty of Economics
UDC:	658
COBISS:	22703875
ISSN:	1580-0466
Views:	391
Downloads:	106
Average score:	0 (0 votes)
Metadata:

Other data

Secondary language:	Slovenian
Secondary title:	Determinante gotovinskega salda v zasebnih podjetjih
Secondary keywords:	Slovenija;majhna in srednja podjetja;denarni tokovi;likvidnost;
Type (COBISS):	Article
Pages:	str. 5-36, 153
Volume:	ǂVol. ǂ22
Issue:	ǂno. ǂ1
Chronology:	2020
DOI:	10.15458/ebr95
ID:	11924528