International Journal of

Business & Management Studies

ISSN 2694-1430 (Print), ISSN 2694-1449 (Online)
Management Views on Corporate Cash Holdings for Malaysian Firm

Abstract

 

This paper examines the views of managers of the 250 largest Malaysian companies about the determinants of corporate cash holdings. Responding managers support the view that the primary cause for a firm’s cash balances is the accumulation of internally generated cash flows, not the issuance of new securities; that firms will generally hold more cash to prevent underinvestment when there is greater uncertainty in future cash flows; to avoid the risk of financial distress; and to ensure the ability to invest in new projects when internally-generated cash flows exhibit high levels of volatility. They also express support for an optimal trade-off approach to cash holdings.