The Determinants of Corporate Cash Holdings in Taiwan

• Main Authors: HSI-MIN CHOU, 周錫敏
• Other Authors: Jong-Rong Chiou
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/04823957350596854685

碩士 === 淡江大學 === 財務金融學系碩士班 === 104 === Cash is a medium of exchange and transaction, and it is also the most liquid asset of a company. In addition, cash is relevant to almost all operating activities. However, when a company holds excess cash, it is more likely to have problems of idle cash, causing the overall cash usage to be inefficient. On the contrary, when a company carries insufficient cash, it is more likely to miss some profitable investment, or even put itself at risk of bankruptcy. Therefore, controlling cash effectively is an important issue for a company. This article uses the methods of Thomas, Kathleen, and Rene (2009) to explore the change of the ratio of cash holdings and debt ratio of Taiwan''s publicly traded companies during 1986 to 2014, and study how relevant variables can impact the ratio of cash holdings. The results show that the company size, the ratio of net working capital, the ratio of capital expenditure, and leverage ratio have significantly negative correlation with the ratio of cash holdings; and the ratio of market to book value, the ratio of cash flow, the ratio of R&D expense, and dividend payment (dummy) have a positive correlation with the ratio of cash holdings. In addition, we use the Fama Mac-Beth regression model to research the relationship between the explanatory variables and the ratio of cash holdings during sample period. We found that the market book value has a positive impact on the ratio of cash holdings; the influences of the firm size and the ratio of R&D expenses on the ratio of cash holdings are decreasing; and the influences of the ratio of cash flow, the ratio of net working capital, the ratio of capital expenditure, and leverage ratio on the ratio of cash holdings increase first, and then decrease as time goes by during the sample period.