Cash holdings and firm performance: A perspective on non-linear relationships and the impact of the COVID-19 pandemic


Authors

  • Tran Manh Ha Banking Academy
DOI: https://doi.org/10.57110/vnu-jeb.v4i5.295

Keywords:

Cash holding, non-linear relationship, firm performance, moderating impact

Abstract

This paper clarifies the relationship between cash holdings and firm performance among 355 listed companies on the Ho Chi Minh Stock Exchange in Vietnam during 2009-2023. Empirical results show the non-linear impact of cash holdings on firm performance ROA and ROE. The inflection point is 0.26, which means that when the ratio of cash holdings to total assets exceeds approximately 26%, the benefits of increasing cash holdings are not sufficient to offset the costs, thereby generating an overall negative impact. During the pandemic, firms with high levels of cash holdings suffered less severe declines in ROA compared to firms with lower cash holdings. The study hopes to provide useful implications for corporate managers on cash holding management.

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Published

25-10-2024

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How to Cite

Tran Manh Ha. (2024). Cash holdings and firm performance: A perspective on non-linear relationships and the impact of the COVID-19 pandemic. VNU JOURNAL OF ECONOMICS AND BUSINESS, 4(5), 96. https://doi.org/10.57110/vnu-jeb.v4i5.295

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