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Determinants of corporate cash holdings in times of crisis: insights from Brazilian sugarcane industry private firms

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  • Silva Manoel, Aviner Augusto
  • Moraes, Marcelo Botelho da Costa
  • Lopes Santos, David Ferreira
  • Fava Never, Marcos

Abstract

The decision-making process regarding cash allocation, especially in times of recession, is somewhat challenging. Thus, the aim of this study is to evaluate the effects of the financial crisis in cash holdings of privately-held firms in the Brazilian sugarcane industry. For this purpose, a unique, hand-collected panel data of 31 firms for the period from 1998 to 2015 was used. The results show that the private firms of the industry maintain higher levels of cash than the average found by studies with Brazilian public companies. Furthermore, between the two dummy variables used, representing the subprime crisis and the most recent economic crisis in Brazil, only the second one was significant. Finally, in order to overcome the adverse conditions of the current Brazilian economic crisis, it was observed an increase in cash holdings, which, in turn, denotes the relevance of precautionary reasons in the understanding of cash management.

Suggested Citation

  • Silva Manoel, Aviner Augusto & Moraes, Marcelo Botelho da Costa & Lopes Santos, David Ferreira & Fava Never, Marcos, 2018. "Determinants of corporate cash holdings in times of crisis: insights from Brazilian sugarcane industry private firms," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(2), March.
    • Handle: RePEc:ags:ifaamr:269548
    DOI: 10.22004/ag.econ.269548
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    2. Phung Anh Thu & Nguyen Vinh Khuong, 2018. "Factors Effect on Corporate Cash Holdings of the Energy Enterprises Listed on Vietnam s Stock Market," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 29-34.

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