Testing the partial adjustment model of optimal cash holding: Evidence from Amman stock exchange-Reference-Cited by-同舟云学术

Testing the partial adjustment model of optimal cash holding: Evidence from Amman stock exchange

Published:2015 Issue:1 Volume:13 Page:15-23
ISSN:1810-3057
Container-title:Corporate Ownership and Control
language:en
Short-container-title:COC

Author:

Zurigat Ziad Mohammad¹^ORCID,Jawdat Nadia¹

Affiliation:

1. Yarmouk University, Jordan

Abstract

This study aims at testing the partial adjustment model of cash holdings to investigate whether Jordanian industrial firms have a target cash holdings and how fast they move toward that target when any target deviation exists. A sample of 57 industrial firms listed in the Amman Stock Exchange (ASE) over the period 2001-2013 is used. The study uses the estimated fitted values from the conventional cash equation as a proxy for the target cash holding. Using pooled and panel data analysis, the study provides evidence suggesting that cash flows, net working capital, leverage and firm size significantly affect the cash holdings of Jordanian firms. Moreover, it reveals that Jordanian industrial firms have a target cash level and make a target reversion whenever needed. However, Jordanian industrial firms adjust their actual cash holdings to its target level too slowly.

Publisher

Virtus Interpress

Subject

General Business, Management and Accounting

Link

https://virtusinterpress.org/IMG/pdf/10-22495_cocv13i1p2.pdf

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