Determinants of Cash Holdings in Listed Companies in Poland
Fryderyk Mirota 1  
,   Natalia Nehrebecka 1, 2  
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Uniwersytet Warszawski, Wydział Nauk Ekonomicznych
Narodowy Bank Polski, Departament Statystyki
Submission date: 2018-02-20
Acceptance date: 2018-07-11
Publication date: 2018-09-30
GNPJE 2018;295(3):75–102
The aim of this article is to discuss basic theories concerning corporate cash holdings as well as to identify and explain the main differences between them. The authors also set out to identify the key determinants of corporate cash holdings in order to indicate which of the presented theories better explains its volatility in the case of listed companies in Poland. The analysis was conducted on the basis of unbalanced panel data containing information on the financial statements of companies listed on the Warsaw Stock Exchange between 1999 and 2015 as well as information on the macroeconomic environment. To estimate the parameters, a system GMM estimator with a robust variance-covariance matrix was used. It was shown that the level of corporate cash holdings is positively associated with the leverage ratio, cash flow, firm size and the value of working capital. In addition, a significant negative relation was found between corporate cash holdings and dividend payouts. Moreover, it has been shown that the characteristics of the macroeconomic environment have a significant association with the size of corporate liquid assets, which was further confirmed by stress tests analysis. Finally, based on the results, we can point to the advantage of the postulates of pecking order theory over the postulates of trade-off theory, with reference to cash held by the analysed group of entities.