ARTICLE

DETERMINANTS OF CORPORATE CASH HOLDINGS IN HOSPITALITY SECTOR OF UNITED STATES OF AMERICA USING TWOSTEP SYSTEM GMM

03 Pages : 25-35

http://dx.doi.org/10.31703/gmsr.2021(VI-IV).03      10.31703/gmsr.2021(VI-IV).03      Published : Dec 2021

Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM

    This study investigates the determinants of cash holding in the Hospitality sector in the USA for the period of 14 years from 2005-to 2018. The selection of 2005 as a base year was due to Thomson Reuter Data Stream registered with International Classification Benchmark (ICB). Determinants i.e. LVG, CF-V, and LQTY,have a positive impact, while SZE, CP-EXP, GR_OPP, CACF, A-INT, DDD, and SX have a negative impact on cash holding. Furthermore, model 2 shows a sub-sector where Restaurant and bar is taken as a reference year. Airlines companies retain excess for their operating activities while Hotel is found significant but prevail a negative coefficient. So, they may easily access to financial market easily. Unfortunately, other sub-sector, i-e, gambling, recreational activities, and tours and Travels, are found insignificant. The estimated sign prevails that there is no issue of auto correlation. While Ho of Hansen's test indicates that there is no issue of explanatory variable and error terms.

    Determinants, Hospitality Sectors, GMM
    (1) Majid Mumtaz
    PhD Candidate, Institute of Business Leadership, Abdul Wali Khan University, Mardan, KP, Pakistan.
    (2) Wisal Ahmad
    Assistant Professor, Abdul Wali Khan University, Mardan, Kpk, Pakistan.
    (3) Yousaf Khan
    National University of Modern Languages (NUML).
  • Ahmad, W., & Adaoglu, C. (2018). Cash management in the travel and leisure sector: evidence from the United Kingdom. Applied Economics Letter, 26(7), 618-621.
  • Ali, A., & Yousaf (2013). Determinants of cash holding in German Market, Journal of Business and Management, 12(6), 28-34.
  • Al-Najjar, B., & Belghitar, Y. (2011). Corporate cash holdings and dividend payments: evidence from simultaneous analysis. Managerial and Decision Economics, 32(4), 231-241. https://doi.org/10.1002/mde.1529
  • Bashir, M. M. S. (2014). Determinants of Corporate Cash Holdings: Panel Data. Analysis: Pakistan. International Journal of Current Research, 6(2), 5316-5318
  • Bates, T., Kahle, K. & Stulz R., (2009). Why do U.S. firms hold so much more Cash than they used to? The Journal of Finance. LXIV(5).
  • Chauhan, Y., Pathak, R., & Kumar, S. (2018). Do bank-appointed directors affect corporate cash holding? International Review of Economics & Finance, 53, 39-56
  • Drobetz, W., & Grüninger, M. C. (2007). Corporate cash holdings: Evidence from Switzerland. Financial Markets Portfolio Management, 21, 293-324. https://doi.org/10.1007/s11408-007-0052-8
  • Ferreira, M. A., & Vilela, A. S. (2004). Why do firms hold cash: Evidence from EMU countries? European Financial Management, 10 (2), 295-319
  • Gill, A., & Shah, C. (2012). Determinants of corporate cash holdings: Evidence from Canada. International Journal of Economics and Finance, 4(1), 70-79.
  • Hardin, W. G., Highfield, M. J., Hill, M. D., & Kelly, W. (2009). The determinants of REIT cash holdings. Journal of Real Estate Financial Economics, 39 (1), 39-57. https://doi.org/10.1007/s11146-007-9103-1
  • Hu, Y., Li, Y., & Zeng, J. (2018). Stock liquidity and corporate cash holdings, Finance Research Letters.
  • Islam, S. (2012). Manufacturing firms' cash holding determinants: Evidence from Bangladesh. International Journal of Business and Management, 7 (6), 172-184. https://doi.org/10.5539/ijbm.v7n6p172
  • Jamil, S., Anwar, A., Afzaal, N., Tariq, A., & Asif, M. (2016). Determinants of 67 Corporate Cash Holdings: Empirical Analysis of Pakistani Firms. Journal of Economics and Finance. 7(3), 29-35.
  • Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance and takeovers. American Economic Review, 76,323-339.
  • Kim, J., Kim, H., & Woods, D. (2011). Determinants of corporate cash-holding levels: An empirical examination of the restaurant industry. International Journal of Hospitality Management, 30, 568-574. https://doi.org/10.1016/j.ijhm.2010.10.004
  • Lee, E., & Powell, R. (2011). Excess cash holdings and shareholder value. Journal of Accounting & Finance, 51, 549-574. https://doi.org/10.1111/j.1467- 629x.2010.00359.x
  • Maheshwari, Y., & Rao, K. V. (2017).Determinants of corporate cash holdings. Global Business Review, 18 (2), 416- 427. https://doi.org/10.1177/09721509166686
  • Martínez- Sola, C. Garcia-Teruel, P. J. & Martínez-Solano, P. (2011). Corporate cash holding and firm value. Applied Economics, 45(2), 161-170.
  • Minton, B. A., & Schrand, C. (1999).The impact of cash flow volatility on discretionary investment and the costs of debt and equity financing. Journal of Financial Economics, 54 (3), 423-460. https://doi.org/10.1016/s0304- 405x(99)00042-2
  • Mumtaz, M., Ahmad, W., & Shah, S. A. A. (2020): Determinants of Corporate Cash Holding in Hospitality Sector of France, Spain and United State of America, Global Economic Review, V (III) 55-66.
  • 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, 13,187-221. https://doi.org/10.1016/0304- 405x
  • Nyborg, K. G., & Wang, Z. (2013). Stock liquidity and corporate cash holdings: Feedback and the Cash as Ammunition Hypothesis, Swiss Finance Institute Research Paper No. 13-36
  • 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. https://doi.org/10.1016/s0304- 405x(99)00003-3
  • Ozkan, A., & Ozkan, N. (2004). Corporate cash holdings: An empirical investigation of UK companies. Journal of Banking and Finance, 28 (9), 2103-2134. https://doi.org/10.1016/j.jbankfin.2003.08.00 3
  • Paskelian, O. G., Bell, S., & Nguyen, C. V. (2010). Corporate governance and cash holdings: a comparative analysis of Chinese and Indian firms. The International Journal of Business and Finance Research, 4, 59-73.
  • Roodman, D. (2009). XTABOND2: Stata module to extend xtabond dynamic panel data Estimator .In Statistical software components S435901. Boston College Department of Economics.
  • Singal, M. (2015). How is the hospitality and tourism industry different? An empirical test of some structural characteristics. International Journal of Hospitality Management, 47, 116-119. https://doi.org/10.1016/j.ijhm.2015.03.006
  • Upenja, A., & Dalbor, M. C. (2001).An examination of capital structure in the restaurant industry. International Journal of Contemporary Hospitality Management, 13(2), 54-59. https://doi.org/10.1108/09596110110381825
  • Uyar, A., & Kuzey, C. (2014). Determinants of corporate cash holdings: Evidence from emerging market of Turkey. Applied Economics, 46 (9), 1035-1048. https://doi.org/10.1080/00036846.2013.8662 03

Cite this article

    APA : Mumtaz, M., Ahmad, W., & Khan, Y. (2021). Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM. Global Management Sciences Review, VI(IV), 25-35. https://doi.org/10.31703/gmsr.2021(VI-IV).03
    CHICAGO : Mumtaz, Majid, Wisal Ahmad, and Yousaf Khan. 2021. "Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM." Global Management Sciences Review, VI (IV): 25-35 doi: 10.31703/gmsr.2021(VI-IV).03
    HARVARD : MUMTAZ, M., AHMAD, W. & KHAN, Y. 2021. Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM. Global Management Sciences Review, VI, 25-35.
    MHRA : Mumtaz, Majid, Wisal Ahmad, and Yousaf Khan. 2021. "Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM." Global Management Sciences Review, VI: 25-35
    MLA : Mumtaz, Majid, Wisal Ahmad, and Yousaf Khan. "Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM." Global Management Sciences Review, VI.IV (2021): 25-35 Print.
    OXFORD : Mumtaz, Majid, Ahmad, Wisal, and Khan, Yousaf (2021), "Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM", Global Management Sciences Review, VI (IV), 25-35
    TURABIAN : Mumtaz, Majid, Wisal Ahmad, and Yousaf Khan. "Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM." Global Management Sciences Review VI, no. IV (2021): 25-35. https://doi.org/10.31703/gmsr.2021(VI-IV).03