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Cash holding models in nonprofit organizations: an integrative approach

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Listed:
  • Teresa Elvira-Lorilla
  • Inigo Garcia-Rodriguez
  • M. Elena Romero-Merino
  • Marcos Santamaria-Mariscal

Abstract

This study proposes a model to better explain the cash holdings of nonprofit organizations (NPOs) using a sample of 9,185 charities from England and Wales for 2015-2022 (51,685 annual observations). We adapt the traditional variables of Opler et al. (1999) to NPOs and combine them with those already proposed by Fisman and Hubbard (2003) and some additional NPO’s specific variables. Our results show that most of the explanatory power comes from the traditional adapted variables although specific variables are also significant. Therefore, we propose an integrative model for determining NPO cash holdings. We also find that the pecking order arguments are the most appropriate to explain the behavior of the NPOs.

Suggested Citation

  • Teresa Elvira-Lorilla & Inigo Garcia-Rodriguez & M. Elena Romero-Merino & Marcos Santamaria-Mariscal, 2025. "Cash holding models in nonprofit organizations: an integrative approach," Economics and Business Letters, Oviedo University Press, vol. 14(4), pages 206-221.
    • Handle: RePEc:ove:journl:aid:22418
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    File URL: https://reunido.uniovi.es/index.php/EBL/article/view/22418
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    References listed on IDEAS

    as
    1. 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.
    2. Miguel A. Ferreira & Antonio S. Vilela, 2004. "Why Do Firms Hold Cash? Evidence from EMU Countries," European Financial Management, European Financial Management Association, vol. 10(2), pages 295-319, June.
    3. Core, John E. & Guay, Wayne R. & Verdi, Rodrigo S., 2006. "Agency problems of excess endowment holdings in not-for-profit firms," Journal of Accounting and Economics, Elsevier, vol. 41(3), pages 307-333, September.
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