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Liquidity, leverage, and cash holding: Evidence from Indonesia listed real estate firms

Author

Listed:
  • Zunairoh

    (Airlangga University, Surabaya, Indonesia)

  • Fatkhurrohman

    (Gadjah Mada University, Yogyakarta, Indonesia)

Abstract

The cash holding policy by each company depends on conditions that reflect the company and its underlying motives. This study aims to examine the effect of liquidity and leverage with variable control dividend payment and company size on cash holding in property & real estate companies in Indonesia during the period 2012-2016. The research method used is multiple linear regression analysis. Based on the results of the analysis it can be con- cluded that the variables liquidity, leverage, and dividend payment have a positive effect on cash holding, while the firm size has a negative effect on cash holding. The purpose of this paper is to find empirical evidence to analyze the effect of liquidity and leverage with dividend payment control variables and firm size on cash holding. This study uses a quantitative approach, namely by recording and analyzing the data of the research in an exact manner using statistical calculations. The approach used in research by measuring the indicators of the research variables so that an overview is obtained between these variables. Based on the results of data analysis that refers to research objectives, hypotheses, and analysis models, it can be concluded that in property and real estate companies, liquidity variables have a significant positive effect, variable size has a significant negative effect, and leverage and dividend payment have no significant positive effect on cash holding. This research uses only one industry in one country. For the researchers then they can use several countries to obtain adequate data and results. This research is very interesting because the property and real estate industry can be called rampant lately due to the tax amnesty turmoil that has made this sector more crowded. Naturally it requires a place to increase with increasing population. More properties in Indonesia are mentioned by the growth of the tourism and business sector. Cash management is needed as a consideration in investment decisions.

Suggested Citation

  • Zunairoh & Fatkhurrohman, 2019. "Liquidity, leverage, and cash holding: Evidence from Indonesia listed real estate firms," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 5(2), pages 79-87.
    • Handle: RePEc:apb:jabsss:2019:p:79-87
    DOI: 10.20474/jabs-5.2.2
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    References listed on IDEAS

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    1. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    2. Atallah Ahmad Hosban, 2016. "Accounting Disclosure for Stock Goods and Industrial Companies IAS 2–An Analytical Study of Industrial Companies Listed on the Amman Stock Exchange," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 2(2), pages 24-28.
    3. Ozkan, Aydin & Ozkan, Neslihan, 2004. "Corporate cash holdings: An empirical investigation of UK companies," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2103-2134, September.
    4. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
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    Cited by:

    1. Orman Hamedi Ilkhechi & Saeid Anvar Khatibi, 2020. "The Impact of Earnings Persistence on the Operating Cash Flows with Emphasis on Financial Constraints," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 6(5), pages 265-274.
    2. Sam Sundar Chintha & Kollipara Vamsi Prasad, 2021. "A Study on the Impact of Cash Management on the Financial Performance of the Listed Manufacturing Companies from Muscat Securities Market, Sultanate of Oman," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 7(1), pages 25-35.

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