Determinants of Cash Holding Decision: Evidence from Food Industry of Pakistan

Cash holding is a critical decision in any corporation around the globe. The ultimate objective of current study is to explore the cash holding determinants for making the decision in food industry of Pakistan. To obtain the objectives of current study data was gathered from the State Bank of Pakistan over a period of 8 years (2008 to 2015) of 39 food companies. The current study used correlation analysis, descriptive statistics and pooled ordinary least square regression model for analysis of selected firms. The empirical results of the research revealed that Cash flow; Leverage and Liquidity ratio observed a significant negative effect on cash holding. Moreover, profitability and size has significantly positive relationship with cash holding. Finally, the dividend policy and cash holding found to be insignificant positive association. The results of this study would help to the management for taking right decisions to keep optimal amount of cash holding.