The research investigates the country-specific variables that affect financial companies’ corporate cash holdings, particularly in the Asia Pacific and Europe. From 2010 through 2020, corporate cash holdings were examined. The financial firms in the research are divided into two categories: Europe and Asia. Our study seeks to identify which variables are more significant in determining cash holdings disparities across Asia Pacific and European nations. A Dynamic Panel Model with one and two-step technique GMM panel estimators was used to experimentally evaluate the hypothesis. The research’s results are disclosed. 1) Asian firms have somewhat higher cash holdings than European firms. 2) The larger cash holdings in Asia Pacific nations are not due to an agency crisis. 3) In terms of company-level capital holdings drivers, business size, financial instability, acquisition, and profitability all have a positive effect on cash holdings in both sectors. 4) High-profit businesses retain less cash on hand to avoid taking unnecessary risks and instead invest it in profitable development projects. This study offers scholars and practitioner’s complete information since it focuses on the factors that affect companies’ cash holdings.
Keywords: Cash Holdings, One & Two-step Systems, Country-specific Determinants, Dynamic Panel Model (GMM).
Related Post