The Behavior of Corporate Cash Holdings: Evidence from Saudi Arabia.

Abstract

This paper investigates the behavior of corporate cash holdings across countries using publicly traded firms from the United States and Saudi Arabia. It documents that Saudi firms hold less cash than U.S. firms and tries to explain the differences in the behavior of cash holdings. It shows that Saudi firms with governmental ownership hold less cash than Saudi firms without governmental ownership. Consequently, it shows that Saudi firms are different from U.S. firms and ownership structure has a significant impact on the Saudi cash holding decisions.

Keywords: Saudi Arabia, Corporate Cash Holdings, Financial Flexibility, Financial Constraints

JEL Classification: G20, G32