impact of cash holding on firm's profitability" study of KSE 100 index companies

Abstract

In this study, the analysis of firm's cash holding and its impact on the profitability has been studied. So, for this purpose the non-financial listed firms in the KSE- 100 Index were chosen. The main Independent variable was Cash Holding while the major dependent variables were ROE and ROA. To avoid omitted variable bias in explaining cash holding's impact on the profitability of these firms several controlling variables i.e. Size of the firm, Leverage and Quick Ratio were also a part of this study. The data from 2013 to 2017 for all the aforementioned variables has been gathered through annual financial statements ofthe companies and was then analyzed through panel data regression and results were than interpreted. The study reveal that firms profitability is positively related with cash holdings, size of firm and quick ratio or liquidity while leverage is negatively related with the profitability of the firm. These relationship were also glorified in the correlation analysis of the variables as well