Effect of cash holdings on firm performance: the role of board independence and institutional ownership
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Date
2023
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KNUST
Abstract
This study examines the effect of cash holdings on firm performance with corporate governance as moderating variable. The time horizon is twelve (12) years from 2010 to 2021, involving eighteen (18) non-financial firms. The study is quantitative, and panel regression is employed to analyse the data. The study finds that cash holdings has a positive relationship with firm performance. The study further finds that board independence positively moderates the relationship between cash holdings and firm performance. The study also finds that ownership structure negatively moderates the relationship that exists between cash holdings and firm performance. This study recommends that Non-financial firms optimise their cash management strategies for long-term growth. They can achieve this by conducting a thorough analysis of the company's cash flows, considering both inflows and outflows; determining the optimal level of cash reserves required to meet operational needs; investing in growth initiatives; and navigating economic uncertainties. Consider allocating cash towards research and development, market expansion, technology upgrades, and other initiatives that enhance competitive advantage and firm performance. By optimising their cash management strategy, firms can ensure that they have the right amount of cash on hand to meet their short-term needs while also investing in growth initiatives that will benefit the company in the long term.
Description
A thesis submitted to the department of accounting and finance, Kwame Nkrumah university of science and technology, in partial fulfilment of the requirements for the degree of master of science in accounting and finance school of business administration, knust college of art and social science