An Insight Into Islamic Firms Investments Cash Flow Sensitivity And Optimal Cash Holdings

Abstract

The rationale behind this study is particularly scrutinizing the effect and evaluate the extent to which cash flow, liquidity, dividends, firm size, cash flow volatility, and leverage has on the cash holdings of the Islamic Manufacturing firms of KMI 30 index. This is therefore a significant study in terms of the Islamic perspective as it is going to gauge the impact of all afore mentioned variables on activities of a firm when there are various credit-based restrictions to some extent. 26 firms listed in the KMI are selected to inspect any possible association. Precisely, financial data of five year i.e. 2010-2015 has been chosen to evaluate. Panel data regression models such that the random effect model, fixed effect model, and the common effect model are applied for the conduction of analysis. This study will certainly help investors and also financial analysts in order to have a better understanding of the factors under discussion in this study and their impact on Pakistani Islamic Manufacturing Firms.