Firm’s Characteristics and Cash Holdings: Evidence from Nigeria, South Africa and Kenya
- October 13, 2020
- Posted by: RSIS Team
- Categories: Accounting, IJRIAS
International Journal of Research and Innovation in Applied Science (IJRIAS) | Volume V, Issue IX, September 2020 | ISSN 2454–6186
Firm’s Characteristics and Cash Holdings: Evidence from Nigeria, South Africa and Kenya
Nnubia, Innocent Chukwuebuka1, Ofoegbu, Grace N.2, Nnubia, Juliet Chinelo3
1,3 Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria
2Department of Accountancy, University of Nigeria .Enugu State, Nigeria
Abstract:- The study examined the relationship between firm’s characteristics and cash holdings of listed consumer and industrial goods firms in Nigeria, South Africa and Kenya. Out of 35, 23 and 15 listed consumer and industrial goods firms in Nigeria,South Africa and Kenya respectively, we sampled fifty-two (33 for Nigeria, 12 for South Africa and 7 for Kenya)firms for a period of 8 years (from 2011-2018). The main type of data used in this study is secondary in nature; sourced from the financial statements of the selected firms via Nigerian Stock Exchange (NSE),Johannesburg Stock Exchange (JSE), andNairobi Securities Exchange (NSE). This study applied ex-post facto research design. The data collected were analyzed using Pearson product-moment correlation matrix. The results revealed that in South Africa, firm size (FSIZE) was statistically significant at 5% with its t-value as 2.083134 and p-value as 0.0400; while in both Nigeria and Kenya, it was statistically insignificant at 5% with its t-values as -1.000160 and-1.900007 and p-values as 0.3182 and 0.0631 respectively.In Kenya, leverage (LEVG) was statistically significant at 5% with its t-value as 3.850902 and p-value as 0.0003; while in both Nigeria and South Africa, it was statistically insignificant at 5% with its t-values as 0.985502 and -0.584775 and p-values as 0.3253 and 0.5601 respectively.In Nigeria and Kenya,profitability (PROF) was statistically significant at 5% with its t-values as 5.889308 and 4.249736 and p-values as 0.0000 and 0.0001 respectively; while in South Africa, it was statistically insignificant at 5% with its t-value as 0.435708 and p-value as 0.6641. Finally, dividend policy (DIVP) was statistically insignificant at 5% in Nigeria, South Africa and Kenya with its t-values as -1.098510, 1.691096 and 1.234615 and p-values as 0.2730, 0.0942 and 0.2226 respectively.In view of the discoveries of our investigation, a financial specialist can sensibly reason that an organization with high leverage ought to like to hold more money. The higher leverage recommends higher office costs; this may be because of the potential size of riches move from obligation holder to investors. Thus, insightful supervisors will need to abstain from holding over the top money saves as this would pull in examination from the capital markets.
Key words: cash holdings, firm size, leverage, profitability, dividend policy.
