Open Access
Article
SciPap-1528
Impact of Company-Specific Determinants on Corporate Cash Holdings: Evidence From South-East European Countries
by
Aleksandar Naumoski 1,* 
and Vesna Bucevska 2
1 Faculty of Economics, Ss. Cyril and Methodius University in Skopje, Blvd. Goce Delchev 9V, Skopje 1000, North Macedonia
2 Faculty of Economics, Ss. Cyril and Methodius University in Skopje, Blvd. Goce Delchev 9V, Skopje 1000, North Macedonia
* Authors to whom correspondence should be addressed.
Abstract: This paper investigates the impact of intercompany determinants on corporate cash holdings in South East Europe. We researched a large sample of companies listed on the stock exchanges. We found that SEE companies’ cash holdings on average is 6.94% of the total assets, which is lower than in developed countries. Intercompany determinants have a significant impact on the company’s cash holdings. Our results suggest that cash holdings are positively affected by the size of the firms, cash flow, cash flow uncertainty, debt maturity, and growth opportunities. Cash holdings are negatively affected by the net working capital, financial leverage, and capital expenditures. SEE companies operate in underdeveloped financial markets with limited access to finances, and their cash holding decisions are mostly determined by the transaction motive. Our findings indicate that companies in SEE do not pursue a cash optimization policy. They largely follow the pecking order pattern and the cash holding of the firm is mostly determined by means of the relationship between the capital investments and internally generated funds.
Keywords: Cash Holdings, South East Europe, Trade-Off Theory, Pecking Order, Transaction Motive
JEL classification: G3 - Corporate Finance and Governance, G32 - Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill
Received: 26 April 2022 / Revised: 17 October 2022 / Accepted: 18 October 2022 / Published: 20 October 2022
