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Corporate cash holdings and dividend payments: evidence from simultaneous analysis

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  • Basil Al‐Najjar
  • Yacine Belghitar

Abstract

This study explores the simultaneous relationship between corporate cash holdings and dividend policy using a large sample of around 400 non-financial firms for the period from 1991 to 2008. The results show that cash holdings are affected by dividends, leverage, growth, size, risk, profitability, and working capital ratio. Dividend policy is affected by cash, leverage, growth, size, risk, and profit. When controlling for simultaneity, dividend payments do not appear to significantly affect cash holdings, nor do cash holdings affect dividend policy. The empirical analysis suggests that simultaneity is crucial in analyzing corporate cash holdings and dividend policy. Copyright (C) 2011 John Wiley & Sons, Ltd.

Suggested Citation

  • Basil Al‐Najjar & Yacine Belghitar, 2011. "Corporate cash holdings and dividend payments: evidence from simultaneous analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 32(4), pages 231-241, June.
  • Handle: RePEc:wly:mgtdec:v:32:y:2011:i:4:p:231-241
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    File URL: http://hdl.handle.net/10.1002/mde.1529
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    Cited by:

    1. Chikashi Tsuji, 2014. "Cash Holdings, Dividend Policy, and Stock Return of the Automobile Related Firms at the Tokyo Stock Exchange: Before and After the US Lehman Shock," Journal of Social Science Studies, Macrothink Institute, vol. 1(2), pages 32-46, July.
    2. Orens, Raf & Reheul, Anne-Mie, 2013. "Do CEO demographics explain cash holdings in SMEs?," European Management Journal, Elsevier, vol. 31(6), pages 549-563.
    3. repec:eee:touman:v:42:y:2014:i:c:p:342-351 is not listed on IDEAS
    4. Akbar, Saeed & Rehman, Shafiq ur & Ormrod, Phillip, 2013. "The impact of recent financial shocks on the financing and investment policies of UK private firms," International Review of Financial Analysis, Elsevier, vol. 26(C), pages 59-70.
    5. Al-Najjar, Basil, 2013. "The financial determinants of corporate cash holdings: Evidence from some emerging markets," International Business Review, Elsevier, vol. 22(1), pages 77-88.
    6. Yacine Belghitar & James Khan, 2013. "Governance mechanisms, investment opportunity set and SMEs cash holdings," Small Business Economics, Springer, vol. 40(1), pages 59-72, January.
    7. repec:wsi:afexxx:v:12:y:2017:i:02:n:s2010495217500099 is not listed on IDEAS
    8. Al-Najjar, Basil & Clark, Ephraim, 2017. "Corporate governance and cash holdings in MENA: Evidence from internal and external governance practices," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 1-12.

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