Factors affecting Cash Holding Choice Chosen by the Finance Manager: Evidence from the manufacturing Industry of Pakistan

Abstract

The purpose of this research is to identify the factors that influence cash-holding choices in Pakistan's food business so that appropriate recommendations may be made. The State Bank of Pakistan gathered data from 39 food companies from 2013 to 2020 for the research. We applied static panel data analysis techniques to the inference’s output by utilizing correlation analysis, descriptive statistics, and a pooled ordinary least square regression model to investigate specific firms. Cash flow, leverage, and liquidity ratio adversely affected cash holdings; the research found. Profitability and cash holdings are strongly correlated. Finally, dividend policy and cash holding showed minimal correlation. This study has helped management make sensible cash-holding selections. Food companies should maintain their cash levels at optimum levels to enhance their profitability.