Cash holding is one of the most significant components of a firms current assets. The benefit of holding cash revolves around choosing the optimal timing of investment and avoiding under-price issues. This paper investigates the determinants of corporate cash holding of 80 non-financial firms in South Africa between 2007 and 2017. The Arellano-Bover/Blundell-Bond generalized method of moments (GMM) estimates indicate that leverage, firms growth opportunity, business confidence, economic growth and political stability have a negative effect on cash holdings, whereas debt maturity and cashflow exerts a positive influence. Other factors such as firm size, dividends payments, inflation rate and financial crises have an insignificant impact on company cash holdings.
Human Sciences Research Council (Sat,) studied this question.
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