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The determinants of cash holding: Evidence from Dutch listed firms

van der Laan, Mr. Ruben (2020) The determinants of cash holding: Evidence from Dutch listed firms.

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Abstract:This thesis examines the firms specifics determinants of Cash holding for a sample of 495 Dutch publicly listed firms over the period 2014-2018, while controlling for year and industry effects using dummy variables. In doing so the predictions for the various firm-specific determinants, which are suggested by three theoretical models: the trade-off model, the pecking order theory and the free cash flow theory will be tested. The results suggest Leverage and Dividend payment have negative significant influences on Cash holding which is in line with the Trade-off theory and Pecking-order theory. Furthermore the variable Cashflow volatility also suggest that there is a negative relationship which goes against the Trade-off theory. Lastly the variables Bank debt, Liquid assets and Investment opportunity are insignificant which is not unheard of but it is not in line with any of the three main theories. Overall the results show the most support for the Trade-off theory and the Pecking-order theory and the Free Cashflow theory only finds support with the variable Leverage.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:05 communication studies, 83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/85389
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