Corporate Cash Holdings: An Empirical Investigation of UK Companies

41 Pages Posted: 13 Mar 2002

See all articles by Aydin Ozkan

Aydin Ozkan

Hull University Business School (HUBS)

Neslihan Ozkan

University of Bristol - School of Economics, Finance and Management, UK

Abstract

This paper investigates the empirical determinants of corporate cash holdings for a sample of UK firms over the period 1984-1999. We present evidence of the significant relation between managerial ownership and cash holdings. The results also suggest that the way in which managerial ownership exerts influence on cash holding decisions differs between firms with ultimate controllers and those that are widely-held. The results reveal that growth options of firms, cash flows, liquid assets, leverage and bank debt are important in determining cash holdings. In contrast, there is much less evidence that larger firms hold less cash. Our analysis also suggests that unobserved firm heterogeneity and endogeneity are crucial in analysing the cash structure of firms.

Keywords: Cash holdings; Ownership structure; Firm heterogeneity; Panel data

JEL Classification: G3, G32

Suggested Citation

Ozkan, Aydin and Ozkan, Neslihan, Corporate Cash Holdings: An Empirical Investigation of UK Companies. EFA 2002 Berlin Meetings Presented Paper; Liverpool University Economics and Accounting Working Paper No. 2002-1. Available at SSRN: https://ssrn.com/abstract=302313 or http://dx.doi.org/10.2139/ssrn.302313

Aydin Ozkan

Hull University Business School (HUBS) ( email )

Hull, HU6 7RX
United Kingdom

Neslihan Ozkan (Contact Author)

University of Bristol - School of Economics, Finance and Management, UK ( email )

United States

HOME PAGE: http://www.bristol.ac.uk/accounting/staff/ozkan.html

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