Financial Determinants of Corporate Cash Holdings: Evidence from Textile Sector of Pakistan

Abstract

A certain level of cash holding in the organization is critical for the free-flowing operation of the firms. Firms with excess cash holding and cash equivalents can utilize them for reinvestments. Cash holding is basic support for firms who want investment opportunities for rapid growth in the economy. The motive of this research is to deeply understand the determinants of cash holding of Pakistan’s textile sector. A sample of 57 listed non-financial firms from the textile sector of Pakistan were selected. The correlation and regression are used to analyze the results of textile sector of Pakistan. The result of regression shows that cash flow, debt structure, Internal liquidity, and dividend shows significance with the cash holding. The remaining independent variable like size, leverage, and asset tangibility shows the insignificant result with the cash holding. The policy implication for textile sector with respect to textile sector of Pakistan is to get awareness of the determinants, which affects the cash holding of textile sector of Pakistan. The study also help the SECP to initiate polices for rapid growth opportunities, which will help the textile sectors to increase the export of their goods.