Determining the factors of cash holdings – the case of Romanian non-financial companies
Determining the factors of cash holdings – the case of Romanian non-financial companies

Summary/Abstract: The significant increase in company cash holdings hasdrawn the attention of the academic world. As a result, thereis now extensive academic literature which investigates therelationship between cash holdings and their impact oncorporate performance and company values. The study focuseson the motives, determinants and theories of cashholdings. The main objective of the paper was to investigatethe determinants of cash holdings for Romanian companiesfor the period 2006-2015. The findings suggest that, for nonfinancialcompanies, cash holdings are influenced by thestate of the economy. In times of recession, cash could bea good way to ride out the storm without having to ask forextra funding. Thus, companies tend to use internally generatedcash before seeking external financing.In order to analyse the determinants of cash holdings, thisstudy makes use of company level data for listed companieson the Bucharest Stock Exchange (BSE). The data was gatheredfrom multiple sources; however the main source wasthe Amadeus database, which comprises data on almost20 million companies in Europe. This database allows theuser to search by multiple criteria (for instance: geographic,NACE codes, financial criteria, ownership, etc.). The data inthe database is collected by the supplier of this database,Bureau van Dijk, therefore the data is reliable. Other datanecessary for the study was gathered from the BSE website,the website of the Central Depository – an institution adjacentto the BSE - or was extracted from the individual financialreports available on the webpages of the companies.

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