The sensitivity of cash flows to cash holdings: case studies at Vietnamese enterprises

  • Received February 25, 2020;
    Accepted March 17, 2020;
    Published March 30, 2020
  • Author(s)
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  • Article Info
    Volume 17 2020, Issue #1, pp. 266-276
  • Cited by
    5 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

Cash management plays an important role in the business operations. However, holding too much cash results in unnecessary expenses such as opportunity costs, management costs, and representation costs due to negative cash holdings. This study examines the sensitivity of cash flows to cash holdings. The paper uses regression methods for table data, including FEM, REM, GLS, and GMM regression, with a research dataset including non-financial companies listed on Vietnam’s stock market in the period 2008–2018. Empirical results show that cash flows are positively associated with cash holdings levels. At the same time, research has shown an asymmetry in cash flows sensitivity to cash holdings. The study also classified the companies with limited and no financial restrictions. In the Vietnamese context, compared to unrestricted companies, financially restricted companies have a lower cash flows sensitivity. The research results are the basis for enterprises to manage cash better and increase business efficiency in the future.

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    • Table 1. Summary of measurement variables in the research model 1
    • Table 2. Descriptive statistics
    • Table 3. Correlation matrix
    • Table 4. Regression results of model 1
    • Table 5. Regression results of model 2
    • Table 6. Regression results of model 3
    • Conceptualization
      Hung Dang Ngoc
    • Data curation
      Hung Dang Ngoc, Van Vu Thi Thuy, Hung Nguyen Duy
    • Formal Analysis
      Hung Dang Ngoc, Van Vu Thi Thuy
    • Funding acquisition
      Hung Dang Ngoc, Hung Nguyen Duy
    • Investigation
      Hung Dang Ngoc, Van Vu Thi Thuy
    • Methodology
      Hung Dang Ngoc
    • Project administration
      Hung Dang Ngoc
    • Resources
      Hung Dang Ngoc
    • Software
      Hung Dang Ngoc
    • Validation
      Hung Dang Ngoc
    • Visualization
      Hung Dang Ngoc
    • Writing – original draft
      Hung Dang Ngoc
    • Writing – review & editing
      Hung Dang Ngoc