Determinants and Economic Consequence of Corporate Cash Holding in Listed Manufacturing Firms in Nigeria

Oluwamayowa Olalekan IREDELE; Okwy Peter OKPALA; Favour Oluwapelumi OMIWOLE

Oluwamayowa Olalekan IREDELE Department of Accounting, Faculty of Management Sciences, University of Lagos
Okwy Peter OKPALA Department of Accounting, Faculty of Management Sciences, University of Lagos
Favour Oluwapelumi OMIWOLE Department of Accounting, Faculty of Management Sciences, University of Lagos

Keywords: Manufacturing firms, Corporate cash holdings levels, Financial performance, Dividend payment, Cash flow

Abstract

This study is aimed at evaluating the variables that determine corporate cash holding, and the way it impacts on the financial performance of manufacturing companies that are listed in Nigeria. The specific variables that determine corporate cash holding as examined in this study are company size, leverage, and dividend payment. The study adopted 3 corporate finance theories which are the Trade-off theory, Pecking order theory and the Agency theory. Data were extracted from the annual reports of 34 listed manufacturing firms over the period 2018 to 2022. Fixed effect multiple regression analysis was adopted to analyse the data extracted from the published financial report. Result of the study show the degree of cash flow in Nigerian listed manufacturing enterprises is significantly influenced by the size of the organization. Additionally, the investigation showed that corporate cash holdings do not determine the financial performance of Nigerian listed manufacturing companies.