Factors influencing liquidity position of Indian manufacturing companies
| Autor: | Amit Tripathy, Shigufta Hena Uzma |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
050208 finance
Sociology and Political Science media_common.quotation_subject 05 social sciences Monetary economics Development Market liquidity Market mechanism Stock exchange Accounting Pecking order theory Cash 0502 economics and business Profitability index Business Emerging markets 050203 business & management Panel data media_common |
| Zdroj: | Journal of Accounting in Emerging Economies. 10:243-260 |
| ISSN: | 2042-1168 |
| DOI: | 10.1108/jaee-02-2019-0053 |
| Popis: | PurposeThe purpose of this paper is to investigate the increasing demand for corporate liquidity and examines the various factors influencing the cash position of firms in India. The financial policy to hold cash gained impetus after the financial crisis when the companies faced a severe cash crunch. However, the firms operating in emerging nations have an imperfect market mechanism with stringent regulatory norms. Thus, this paper attempts to examine the determinants of corporate cash holdings in an emerging country like India.Design/methodology/approachThe paper focuses on the impact of various factors (leverage, firm size, profitability, growth along with other variables), on the cash structure of all the manufacturing companies listed on the Bombay stock exchange. The study employs panel data methodologies over a sample of 323 firms over a period of eight years from 2010 to 2017.FindingsSignificant estimators affecting cash holdings of a firm are the size of a firm, debt levels, tangibility, sales growth and research and development expense. Overall, the study finds evidence on the existence of Pecking Order theory in explaining the determinants of cash holdings in the Indian market.Research limitations/implicationsThe study attempts to explore the critical determinants of cash in the Indian context which can be useful for managers and academicians to understand how the key theories of cash holdings operate in an emerging economy like India.Originality/valueIndia is an emerging economy and has recently gained global attention and has become a hotspot for foreign investments. Thus, this paper explores pieces of evidence on the critical factors affecting cash holdings in India. The study would provide an understanding of the existing cash policy in the Indian context and attempts to find the changes in the financing structure adopted by the manufacturing industry in the given period. |
| Databáze: | OpenAIRE |
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