This paper examines the relationship between cash hold-ings and performance in Italy over 36 years. Specifically,in light of the presence of conflicting evidence concerningthe worth of cash stock, which could lead to a positiveeffect rather than a negative one, the role of moderatingfactors that can shape the magnitude of this relationship isinvestigated. The results show that the value of cash hold-ings is affected by firm‐specific characteristics, as well asfactors related to the institutional context. Although otherstudies have analyzed moderators one at a time, this is thefirst work to consider how they jointly work. When themoderators are considered together, some of them becomeno longer statistically significant while others become evenmore economically and statistically relevant.
The effect of cash holdings on firm performance in large Italian companies
Cambrea, Domenico Rocco
2019
Abstract
This paper examines the relationship between cash hold-ings and performance in Italy over 36 years. Specifically,in light of the presence of conflicting evidence concerningthe worth of cash stock, which could lead to a positiveeffect rather than a negative one, the role of moderatingfactors that can shape the magnitude of this relationship isinvestigated. The results show that the value of cash hold-ings is affected by firm‐specific characteristics, as well asfactors related to the institutional context. Although otherstudies have analyzed moderators one at a time, this is thefirst work to consider how they jointly work. When themoderators are considered together, some of them becomeno longer statistically significant while others become evenmore economically and statistically relevant.
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