Financial Determinants of Cash Holding Levels: An Analysis of Indian Agricultural Enterprises

Agricultural Economics – Czech, 65, 2019

9 Pages Posted: 13 Jun 2019

See all articles by Kuldeep Singh

Kuldeep Singh

Indian Institute of Information Technology, Allahabad; Shiva Institute of Management Studies

Madhvendra Misra

Indian Institute of Information Technology (IIIT), Allahabad

Date Written: May 10, 2019

Abstract

A significant number of studies have been conducted on the determinants of cash holding levels for different corporates. However, no such study has been witnessed so far on the agricultural enterprises. In this study, we examine the determinants of the cash-holding levels for the Indian agrarian enterprises during 1995–2016 period. With the help of weighted least-squares (WLS) regression analysis, we find evidence that the Indian agro-enterprises with greater lucrative opportunities tend to hold less cash. On the other side, we found that large agro-enterprises tend to hold some other mode of liquid assets rather than cash. The firms with higher capital expenditure and distributing profits as a dividend were shown to hold more cash. In our analysis, we find supportive evidence of the static trade-off theory of cash holding. In general, transaction motives and precautionary motives also play an important role in explaining the determinants of cash holding levels for Indian agrarian enterprises.

Keywords: agricultural cash holding; cash-holding levels; cash management

Suggested Citation

Singh, Kuldeep and Misra, Madhvendra, Financial Determinants of Cash Holding Levels: An Analysis of Indian Agricultural Enterprises (May 10, 2019). Agricultural Economics – Czech, 65, 2019, Available at SSRN: https://ssrn.com/abstract=3386500

Kuldeep Singh (Contact Author)

Indian Institute of Information Technology, Allahabad ( email )

Deoghat
Jhalwa
Allahabad, Uttar Pradesh 211012
India
9650706700 (Phone)
211012 (Fax)

HOME PAGE: http://sites.google.com/view/ks9650

Shiva Institute of Management Studies ( email )

Ghaziabad, IN 201001
India

Madhvendra Misra

Indian Institute of Information Technology (IIIT), Allahabad ( email )

Deoghat
Jhalwa
Allahabad, Uttar Pradesh 211012
India

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