Analysis of cash holding for measuring the efficiency of cash management: A study on IT sector

Abstract: For measuring the efficiency of management of cash, cash holding is one of the most important financial decisions that the manager of the concerned organization, has to make in the organization. Basically, it is observed that the organization hold cash for future purposes is very negligible. If the organization invested cash in profitable securities then there is some flexibility but when it relates to the capital market holding cash is not advantageous. Generally two contradictory theories such as Trade-off theory and the Pecking order theory are considered for measuring the efficiency of cash management. In this study we generally observed measured the efficiency of Cash Management influenced by Cash Holding. We also measured whether cash holding of the organization is affected with the degree of financial leverage, size of the organization, investment and profitability. This study helps us to understand the influence of DFL, Investment and Size of the organization on Cash holding. Proper holding of cash in cash management can prevent the bankruptcy of any organization and also increases the efficiency of Cash or Liquidity management.

How to cite this paper

 Das, S. (2015). Analysis of cash holding for measuring the efficiency of cash management: A study on IT sector.Management Science Letters , 5(1), 51-58.

Refrences

Bari, R. R. (Ed.). (1981). Selected Readings in Cash Management. Triveni Publications.

Bradley, J. F. (1974). Administrative financial management. Dryden Press.

Cohen, J. B., & Robbins, S. M. (1966). The financial manager: basic aspects of financial Administration. Harper & Row.

Dittmar, A., & Mahrt-Smith, J. (2007). Corporate governance and the value of cash holdings. Journal of Financial Economics, 83(3), 599-634.

Fazzari, S. M., & Petersen, B. C. (1993). Working capital and fixed investment: new evidence on financing constraints. The RAND Journal of Economics, 24(3), 328-342.

Ferreira, M. A., & Vilela, A. S. (2004). Why do firms hold cash? Evidence from EMU countries. European Financial Management, 10(2), 295-319.

Guney, Y., Ozkan, A., & Ozkan, N. (2007). International evidence on the non-linear impact of leverage on corporate cash holdings. Journal of Multinational financial management, 17(1), 45-60.

Keynes, J. M. (2006). General theory of employment, interest and money. Atlantic Publishers & Dist.
Levasseur, M. (1979). Gestion de trésorerie. Economica.

Van Horne, J. C. (1968). Financial management and policy (pp. 254-71). Prentice-Hall.

Kalcheva, I., & Lins, K. V. (2007). International evidence on cash holdings and expected managerial agency problems. Review of Financial Studies, 20(4), 1087-1112.

Kim, C. S., Mauer, D. C., & Sherman, A. E. (1998). The determinants of corporate liquidity: Theory and evidence. Journal of financial and quantitative analysis, 33(3), 335-359.

Myers, S. C. (1977). Determinants of corporate borrowing. Journal of financial economics, 5(2), 147-175.

Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of financial economics, 13(2), 187-221.

Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of financial economics,52(1), 3-46.

Pandey, I. M. (1999). Financial Management–Vikas Publishing House Pvt.Ltd–.
Ramamoorthy, V. E. (1978). Working Capital Management, Madras: Institute of Financial Management and Research, 5.

Solomon, E., & Pringle, J. J. (1981). An introduction to financial management. Scott, Foresman.

Weinraub, H. J., & Visscher, S. (1998). Industry practice relating to aggressive conservative working capital policies. Journal of Financial and Strategic Decision, 11(2), 11-18.

Whited, T. M. (1992). Debt, liquidity constraints, and corporate investment: Evidence from panel data. The Journal of Finance, 47(4), 1425-1460.

Journals

MSL Volumes

Keywords

Authors

Countries

Management Science Letters

Analysis of cash holding for measuring the efficiency of cash management: A study on IT sector Pages 51-58 Download PDF

Add Reviews