Determinants of cash holdings in private firms : the case of the Slovenian SMEs

Angelovska, Marija (author), Valentinčič, Aljoša (author)

This paper examines the determinants of cash holdings in a large sample of the Slovenian small and medium sized companies in the period 2006-2013. The empirical results provide support for the transactions and precautionary motives in the cash policies of the analysed SMEs. However, we find evidence in favour of the speculative motive as well, by ascertaining that smaller, exporting and more profitable firms hold more cash. The paper also establishes that the net working capital and financial debt can be considered as cash substitutes and that keeping close relationships with banks reduces agency costs and information asymmetries and leads to lower cash levels. In addition, the ability to internally generate funds expressed as higher operating cash flow reduces the amounts of cash held. Finally, evidence shows that longer cash conversion cycles and requirements for mandatory retirement benefit contributions result in higher cash balances, while weaker empirical support is found also for the negative influence of the interest rate level on cash holdings.

• Language: English
• Keywords: Slovenia, SMEs, cash flows, liquidity
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication version: Version of Record
• Year: 2020
• Number of pages: Str. 5-36, 153
• Numbering: Vol. 22, iss. 1
• PID: 20.500.12556/RUL-117839
• UDC: 658
• ISSN on article: 1580-0466
• DOI: 10.15458/ebr95
• COBISS.SI-ID: 22703875
• Publication date in RUL: 29.07.2020

Record is a part of a journal

• Title: Economic and business review
• Shortened title: Econ. bus. rev
• Publisher: Ekonomska fakulteta
• ISSN: 1580-0466
• COBISS.SI-ID: 103864832

Licences

• License: CC BY-NC-SA 4.0, Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International
• Link: http://creativecommons.org/licenses/by-nc-sa/4.0/
• Description: A Creative Commons license that bans commercial use and requires the user to release any modified works under this license.
• Licensing start date: 29.07.2020

Secondary language

• Language: Slovenian
• Title: Determinante gotovinskega salda v zasebnih podjetjih
• Keywords: Slovenija, majhna in srednja podjetja, denarni tokovi, likvidnost