Determinants of Cash Holdings: Evidence from Agricultural Firms Listed 0n Nigeria Stock Exchange

Abstract

This study ascertained the factors that determine Cash Holdings in listed Agricultural firms in Nigeria. The specific objectives are to ascertain the relationship or otherwise between Growth Opportunities, Leverage, Cash Flow and Cash Holdings (proxied by Cash and Cash Equivalents) of Agricultural firms listed on the floor of Nigeria Stock Exchange from 2008-2017. Ex-post facto research design was used for this study. Secondary data were sourced from the publications of Nigeria stock exchange and annual financial statement of the sampled firms for the studied period. Inferential statistics of the hypotheses were carried out with the aid of E-view 9.0 statistical software using Pearson co-efficient of correlation, Multicollinearity test and Ordinary Least Square (OLS) Regression Analysis. Specific findings of this study showed that Growth Opportunities and Cash Flow exhibited a significant positive relationship with Cash and Cash Equivalents while Leverage exhibited a significant negative relationship with Cash and Cash Equivalents at 5% significance level respectively. It was recommended among others that manufacturing firms in Nigeria should identify and monitor key business drivers (for example, growth opportunities, leverage and cash flow) since they significantly influence cash holdings.

Keywords: growth opportunities, leverage, cash flow, cash holdings