Cash Holding and Value of Firm: An Empirical Study of Deposit Money Banks in Nigeria Stock Exchange
DOI:
https://doi.org/10.58932/MULE0023Keywords:
Firm Value, Profitability, Sales Growth, Assets GrowthAbstract
Over the years, the exact amount to hold as cash by commercial banks in Nigeria has been a critical issues which affect their value. Therefore, this study aim is to examine the extent at which cash holding and firm value of 12 Deposit Money Banks that are listed on the 31st December, 2022 under the umbrella of regulatory Nigeria Exchange of Stock. The period covered in the course of this study is 11 years which consist of 2012-2022. In measuring, firm value was connected to value of market equity plus debts of total divided by the summation all assets. Cash holding is measured are as follows; Profitability is measured through gross profit margin of the firm, growth sales is measured via total sales-total sales in its previous period)/ total sales. The variable of assets growth is also measured total asset - total assets in its previous period)/ total asset. The research design of Ex-post facto was employed in this study. During data analysis the following were obtained because of the nature of the study; descriptive statistics, regression analysis, random effect, fixed effect and variance inflation factor test. After testing the hypotheses, the demonstrated that among the variables in this study, profitability and growth in sales which constitutes to the independent variable have significant and positive effect for cash holding. Along the line, growth in assets has no significant influence on the cash holding of the firm. Hence, the current study make the recommendations in line with study result of regression analysis and other testing that; bank managers should as a matter of reality advice the banks of receiving and making deposit available to use more of growth in sales variable and profitability in their business since it improves value of the firm. More importantly, they can reduce the quantum growth of assets use as it will in any way improve value of the firm.
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