Manufacturing Firms’ Cash Holding Determinants: Evidence from Bangladesh

Sohani Islam


Cash holding decision is one of the most significant decisions taken by the financial managers of any
manufacturing firms. The decision not only depends upon the theoretical view but also the firm–specific
variables of the economy along with the macro economic variables. This paper aims to determine what variables
play major role in taking cash holding decision by firm. For case purpose we have considered manufacturing
firms of Bangladesh. The data set contains five years’ (2006-2010) data of firm specific variables. Regression
analysis considered sufficient for hypothetically assumed least squared model. The analysis showed all
considered variables other than net working capital, Tobin’s Q and Volatility of Cash flow hold significant
relationship with Cash hold by the firms, which contain cash and cash equivalent. Macroeconomic variables
have not discussed here. The authors considered industry specific analysis may have scope produce more
concentrated and detailed view about firms cash holding determinants of a developing country like Bangladesh.

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