How Does Firm Location Affect Cash Holdings?


Authors

  • Vu Duc Kien Academy of Finance
DOI: https://doi.org/10.57110/vnujeb.v2i6.134

Keywords:

Cash holdings, firm location, listed companies, Vietnam

Abstract

Using a sample of Vietnamese listed companies, this study finds a statistically significant relationship between geographical location and cash holdings. Companies located in the two biggest financial centers, Hanoi and Ho Chi Minh City, have about a two percent higher cash over assets ratio than companies located in other regions. In addition, the average enterprises in five cities under the jurisdiction of the central government (Hanoi, Ho Chi Minh City, Da Nang, Can Tho, and Hai Phong) also have a higher cash-over-assets ratio of about two percent more than their counterparts in the provinces. If geographical location is measured as the distance from the firms’ headquarters to Hanoi or Ho Chi Minh City, the analysis still shows robust evidence.

References

Abushammala, S., & Sulaiman, J. (2014). Cash Holdings and Corporate Profitability: Some Evidences form Jordan. International Journal of Innovation and Applied Studies, 8 (3), 898-907.

Al‐Najjar, B., & Belghitar, Y. (2011). Corporate Cash Holdings and Dividend Payments: Evidence from Simultaneous Analysis. Managerial and Decision Economics, 32(4), 231-241. https://doi.org/10.1002/mde.1529

Boubaker, S. et al. (2015). Geographic Location, Excess Control Rights, and Cash Holdings. International Review of Financial Analysis, 42, 24–37. https://doi.org/10.1016/j.irfa.2014.07.008

Boubaker, A., & Mezhoud, M. (2011). Impact of Managerial Ownership on Operational Performance of IPO Firms: French Context. International Journal of Management Science and Engineering Management, 6(3), 191-197. https://doi.org/10.1080/17509653.2011.10671163

Coval, J. D., & Moskowitz, T. J. (1999). Home Bias at Home: Local Equity Preference in Domestic Portfolios. The Journal of Finance, 54(6), 2045–2073. https://doi.org/10.1111/0022-1082.00181

Drobetz, W. et al. (2010). Information Asymmetry and the Value of Cash. Journal of Banking & Finance, 34(9), 2168–2184. https://doi.org/10.1016/j.jbankfin.2010.02.002

García‐Teruel, P. J., & Martínez‐Solano, P. (2008). On the Determinants of SME Cash Holdings: Evidence from Spain. Journal of Business Finance & Accounting, 35(1‐2), 127-149. https://doi.org/10.1111/j.1468-5957.2007.02022.x

Jensen, M. C. (1986). Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. The American Economic Review, 76(2), 323–329.

John, K. et al. (2011). Does Geography Matter? Firm Location and Corporate Payout Policy. Journal of Financial Economics, 101(3), 533–551. https://doi.org/10.1016/j.jfineco.2011.03.014

Knyazeva, A., & Knyazeva, D. (2008). Local Director Talent and Board Governance. Citeseer. <https://www.efmaefm.org/0efmameetings/efma%20annual%20meetings/2009-Milan/papers/EFMA2009_0479_fullpaper.pdf> Accessed 30.5.2022.

Li, S. et al. (2014). How Much Can We Trust the Financial Report? Earnings Management in Emerging Economies. International Journal of Emerging Markets, 9 (1), 33-53. https://doi.org/10.1108/IJoEM-09-2013-0144

Loughran, T. (2008). The Impact of Firm Location on Equity Issuance. Financial Management, 37(1), 1–21. https://doi.org/10.1111/j.1755-053X.2008.00004.x

Nguyen, H. A. et al. (2021). Ownership Structure and Earnings Management: Empirical Evidence from Vietnam. Cogent Business & Management, 8(1), 1908006. https://doi.org/10.1080/23311975.2021.1908006

Ozkan, A., & Ozkan, N. (2004). Corporate Cash Holdings: An Empirical Investigation of UK Companies. Journal of Banking & Finance, 28(9), 2103-2134. https://doi.org/10.1016/j.jbankfin.2003.08.003

Downloads

Download data is not yet available.

Downloads

Published

25-12-2022

Abstract View

162

PDF Downloaded

101

How to Cite

Duc Kien, V. (2022). How Does Firm Location Affect Cash Holdings?. VNU University of Economics and Business, 2(6). https://doi.org/10.57110/vnujeb.v2i6.134

Issue

Section

Original Articles