ARTICLE

DETERMINANTS OF CORPORATE CASH HOLDINGS IN HOSPITALITY SECTOR OF FRANCE SPAIN AND UNITED STATES OF AMERICA

  1. HOME
  2. ARTICLE

06 Pages : 55-66

http://dx.doi.org/10.31703/ger.2020(V-III).06      10.31703/ger.2020(V-III).06      Published : Sep 2020

Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America

Abstract

    This study determines the effect of parameters used for cash holding in hospitality sector (HS) of target countries i-e France, Spain and United State of America for the period of 14 years (2005-2018). The parameters consist of firm size, leverage, capital expenditure, growth opportunity, liquidity, cash flow, cash flow volatility, asset intangibility, dividend payments and stock exchange. Dynamic panel data is employed for empirical estimation i-e Generalized Method of Moments (GMM). System GMM model estimation reveals that leverage, cash flow volatility and asset intangibility influence cash holdings positively while size, capital expenditure, growth opportunities and cash flow affect cash holdings negatively.

    Cash Holdings, Hospitality, Unique Attributes

    (1) Majid Mumtaz
    IBL, Abdul Wali Khan Univerity, Mardan, KP, Pakistan
    (2) Wisal Ahmad
    Assistant Professor, Institute of Business Studies & Leadership, Abdul Wali Khan University Mardan, KP, Pakistan.
    (3) Syed Arshad Ali Shah
    Lecturer, Bacha Khan University, Charsadda, KP, Pakistan.
Fulltext PDF

References

  • Abbas Ali & Samran Yousaf 2, Determinants of Cash holding in German Market, IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 12, Issue 6 (Sep. - Oct. 2013), PP 28-34.
  • Afza, T., & Adnan, S.M. (2007). Determinants of corporate cash holdings: A case study of Pakistan. Proceedings of Singapore Economic Review Conference (SERC) 2007, Singapore 164-165.
  • Ahmad, W., & Adaoglu, C. (2018). Cash management in the travel and leisure sector: evidence from the United Kingdom. Applied Economics Letter, 26(7), 618-621.
  • Akron, S., Demir, E., Díez-Esteban, J. M., & García-Gómez, C. D. (2020). Economic policy uncertainty and corporate investment: Evidence from the U.S. hospitality industry. Tourism Management, 77, 104019. doi:10.1016/j.tourman.2019.104019
  • Al-Najjar, B., and Belghitar, Y. (2011). Corporate cash holdings and dividend payments: Evidence from simultaneous analysis. Managerial and Decision Economics, 32(4), 231-241. doi:10.1002/mde.1529
  • Antonio, F., Kadyrzhanova, D., Jae W., and Sim, J. W. (2013). Rising intangible capital, shrinking debt capacity, and the US corporate savings glut. Federal Reserve Board working paper. doi:10.2139/ssrn.235086
  • Arellano, M., and Bond, S. (1995). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. Review of Economics Studies, 58, 277-97. doi:10.2307/2297968
  • Baker, M. (2016). Statisticians issue warning over misuse of P values. Nature, 531(7593), 151-151. doi:10.1038/nature.2016.19503
  • Baltagi, B. H. (2005). Econometric analysis of panel data (3rd ed.). England: Wiley.
  • Bashir, M. M. S. (2014). Determinants Of Corporate Cash Holdings: Panal Data Analysis: Pakistan. International Journal of Current Research, 6(2), 5316-5318
  • Bates, T., Kahle, K. and Stulz R., (2009).
  • Baum, C. F, Schaffer, M. E, & Stillman, S. (2002). Instrumental variables and GMM: Estimation and testing (Boston College Working Papers in Economics No. 545). Retrieved from Boston College Department of Economics website: http://fmwww.bc.edu/ec-p/wp545.pdf
  • Baum, C., M. Caglayan, N. Ozhan and O. Talavera,
  • Bigelli, M., and Sanchez-Vidal, J. (2012). Cash holdings in private firms. Journal of Banking & Finance, 36, 26-35. doi:10.1016/j.jbankfin.2011.06.004
  • By William J. Boumol (1952), the transaction demand for cash: An Inventory theoretic approach.
  • Chauhan, Y., Pathak, R., & Kumar, S. (2018). Do bank-appointed directors affect corporate cash holding? International Review of Economics & Finance, 53, 39-56
  • D'Mello. R., Krishnaswami. S., & Larkin. P. J., (2008). Determinants of corporate cash holding: Evidence from spin-offs journal of Banking & Finance. Pp. 1209-1220.
  • Dittmar. A. & Mahrt-Smith. J. (2003). International corporate governance and corporate cash holding. Journal of Financial and Quantitative Analysis. 38(01), 111-133
  • Drobetz, W., and Grüninger, M. C. (2007). Corporate cash holdings: Evidence from Switzerland. Financial Markets Portfolio Management, 21, 293-324. doi:10.1007/s11408-007-0052-8
  • Efstathios Magerakis
  • Ferreira, M. A., and Vilela, A. S. (2004). Why do firms hold cash: Evidence from EMU countries. European Financial Management, 10 (2), 295-319. doi:10.1111/j.1354- 7798.2004.00251.x
  • Gill, A., & Shah, C. (2012). Determinants of corporate cash holdings: Evidence from Canada. International Journal of Economics and Finance, 4(1), 70-79.
  • Hansen, E., & Wagner, R. (2017). Stockpiling cash when it takes time to build: Exploring price differentials in a commodity boom. Journal of Banking & Finance, 77, 197- 212.
  • Hu, Y., Li, Y., & Zeng, J. (2018). Stock liquidity and corporate cash holdings, Finance Research Letters.
  • Islam, S. (2012). Manufacturing firms' cash holding determinants: Evidence from Bangladesh. International Journal of Business and Management, 7 (6), 172- 184. doi:10.5539/ijbm.v7n6p172
  • Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance and takeovers. American Economic Review, 76, 323-339
  • Jensen, M. C., and Meckling, W. (1976). Theory of the firm: managerial behaviour agency costs and ownership structure. Journal of Financial Economics, 30 (4), 474-493. doi:10.1016/0304-405x(76)90026-x
  • Kalcheva, I., and Lins, K.V. (2007). International evidence on cash holdings and expected managerial agency problems. Review of Financial Studies, 20: 1087- 112.
  • Kim, J., Kim, H., and Woods, D. (2011). Determinants of corporate cash-holding levels: An empirical examination of the restaurant industry. International Journal of Hospitality Management, 30, 568-574. doi:10.1016/j.ijhm.2010.10.004
  • Lian, Y., Sepehri, M., & Foley, M. (2011). Corporate cash holdings and financial crisis: An empirical study of Chinese companies. Eurasian Business Reviews, 1(2), 112-124.
  • Maheswari, Y., and Rao, K. T. V. (2017). Determinants of corporate cash holdings. Global Business Review, 18 (2), 416-427. doi:10.1177/0972150916668610
  • Martínez-Sola, C., Garcia-Teruel, P. J & Martínez-Solano, P. (2011). Corporate cash holding and firm value. Applied Economics, 45(2), 161-170
  • Millar. M., H & Orr. D. (1966). A model of the demand for money by firms. Quarterly Journal of Economics, 80, 413-435
  • Minton, B. A., and Schrand, C. (1999). The impact of cash flow volatility on discretionary investment and the costs of debt and equity financing. Journal of Financial Economics, 54 (3), 423-460. doi:10.1016/s0304-405x(99)00042-2
  • Mohsin. S. Shujahat H., H. & Ghulam. M., C. Determinants of corporate cash holding in Pakistan. International Journal of Organization Leadership 5(2016) 50-62.
  • Muncef Guizani, The Financial Determinants of Corporate Cash Holdings in an Oil Rich Country: Evidence from Kingdom of Saudi Arabia, Borsa Istanbul Review, Volume 17, Issue 3, September 2017, Pages 133-143
  • Myers, S. C., and Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187-221. doi:10.1016/0304-405x(84)90023-0
  • Nyborg, K. G., & Wang, Z. (2014). Stock liquidity and corporate cash holdings: Feedback and the Cash as Ammunition Hypothesis, Swiss Finance Institute Research Paper No. 13-36
  • Opler, T., Pinkowitz, L., Stulz, R., and Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of Financial Economics, 52 (1), 3-46. doi:10.1016/s0304-405x(99)00003-3
  • Ozkan, A., and Ozkan, N. (2004). Corporate cash holdings: An empirical investigation of UK companies. Journal of Banking and Finance, 28 (9), 2103-2134. doi:10.1016/j.jbankfin.2003.08.003
  • Paskelian, O. G., Bell, S., and Nguyen, C. V. (2010). Corporate governance and cash holdings: a comparative analysis of Chinese and Indian firms. The International Journal of Business and Finance Research, 4, 59-73.
  • Peterson, M., and Rajan, R. (2002). Does distance still matter: The information revolution in small business lending? The Journal of Finance, 57 (6), 2533-2570. doi:10.1111/1540-6261.00505
  • PWC. (2019). March 2019 global economy Watch [online] Available at: . (Accessed 10 June 2019). https://www.pwc.com/gx/en/issues/economy/global-economywatch/assets/pdfs/is-demography-still-destiny.pdf
  • Rajan, R.G., Zingales, R., 1995. What do we know about capital structure? Some evidence from international data. The Journal of Finance 50 (5), 1421-1460.
  • Riddick, L. A., and Whited, T. M. (2009). The corporate propensity to save. The Journal of Finance, 64 (4), 1729-1766. doi:10.1111/j.1540-6261.2009.01478.x
  • Riddick, L. A., and Whited, T. M. (2009). The corporate propensity to save. The Journal of Finance, 64 (4), 1729-1766. doi:10.1111/j.1540-6261.2009.01478.x
  • Roodman, D. (2008). XTABOND2: Stata module to extend xtabond dynamic panel data estimator. In Statistical software components S435901. Boston College Department of Economics.
  • Singal, M. (2015). How is the hospitality and tourism industry different? An empirical test of some structural characteristics. International Journal of Hospitality Management, 47, 116-119. doi:10.1016/j.ijhm.2015.03.006
  • Uyar, A., & Kuzey, C. (2014). Determinants of corporate cash holdings: Evidence from emerging market of Turkey. Applied Economics, 46(9), 1035-1048.
  • Vatavu, S. (2012). Determinants of Capital structure: Evidence from Romanian manufacturing companies. Journal of Advanced Research in Scientific areas.
  • Wasiuzzaman, S. (2014). Analysis of corporate cash holdings of firms in Malaysia. Journal of Asia Business Studies, 8(2), 118-135.
  • William J. Frazer, TR. The financial structure of manufacturing corporation and the demand for money some empirical funding, Journal of Political Economy Volume 72, Number 2Apr., 1964
  • World Tourism Organization, Tourism Market Trends UNWTO. 2018. UNWTO Tourism Highlights (Ed, 2018). Available at: http://mkt.unwto.org/publication/unwtotourism-highlights.

Cite this article

APA

    APA : Mumtaz, M., Ahmad, W., & Shah, S. A. A. (2020). Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America. Global Economics Review, V(III), 55-66. https://doi.org/10.31703/ger.2020(V-III).06

CHICAGO

    CHICAGO : Mumtaz, Majid, Wisal Ahmad, and Syed Arshad Ali Shah. 2020. "Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America." Global Economics Review, V (III): 55-66 doi: 10.31703/ger.2020(V-III).06

HARVARD

    HARVARD : MUMTAZ, M., AHMAD, W. & SHAH, S. A. A. 2020. Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America. Global Economics Review, V, 55-66.

MHRA

    MHRA : Mumtaz, Majid, Wisal Ahmad, and Syed Arshad Ali Shah. 2020. "Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America." Global Economics Review, V: 55-66

MLA

    MLA : Mumtaz, Majid, Wisal Ahmad, and Syed Arshad Ali Shah. "Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America." Global Economics Review, V.III (2020): 55-66 Print.

OXFORD

    OXFORD : Mumtaz, Majid, Ahmad, Wisal, and Shah, Syed Arshad Ali (2020), "Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America", Global Economics Review, V (III), 55-66

TURABIAN

    TURABIAN : Mumtaz, Majid, Wisal Ahmad, and Syed Arshad Ali Shah. "Determinants of Corporate Cash Holdings in Hospitality Sector of France, Spain and United States of America." Global Economics Review V, no. III (2020): 55-66. https://doi.org/10.31703/ger.2020(V-III).06