The Effect of Cash Holdings on Firm Performance in Large Italian Companies

30 Pages Posted: 30 Jan 2019

See all articles by Maurizio La Rocca

Maurizio La Rocca

Università degli Studi della Calabria

Domenico Rocco Cambrea

Bocconi University

Date Written: February 2019

Abstract

This paper examines the relationship between cash holdings and performance in Italy over 36 years. Specifically, in light of the presence of conflicting evidence concerning the worth of cash stock, which could lead to a positive effect rather than a negative one, the role of moderating factors that can shape the magnitude of this relationship is investigated. The results show that the value of cash holdings is affected by firm‐specific characteristics, as well as factors related to the institutional context. Although other studies have analyzed moderators one at a time, this is the first work to consider how they jointly work. When the moderators are considered together, some of them become no longer statistically significant while others become even more economically and statistically relevant.

Keywords: cash holdings, cash stock, corporate liquidity, firm performance, moderating factors

Suggested Citation

La Rocca, Maurizio and Cambrea, Domenico Rocco, The Effect of Cash Holdings on Firm Performance in Large Italian Companies (February 2019). Journal of International Financial Management & Accounting, Vol. 30, Issue 1, pp. 30-59, 2019, Available at SSRN: https://ssrn.com/abstract=3325375 or http://dx.doi.org/10.1111/jifm.12090

Maurizio La Rocca (Contact Author)

Università degli Studi della Calabria ( email )

Ponte Bucci, Cubo 3C
Rende (Cosenza), Cosenza 87036
Italy

HOME PAGE: http://www.mauriziolarocca.it

Domenico Rocco Cambrea

Bocconi University

Via Sarfatti, 25
Milan, MI 20136
Italy

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