Effect of financial constraints on cash holdings of Vietnamese listed companies

Abstract

Working capital management plays an important role in ensuring the continued operations of any business. Especially, cash holdings are vital to businesses because holding on to their cash allows a timely response to investment and enables them in other activities. However, holding cash in companies with abundant potential is easier than in those with operational difficulties and limited capital. The study focuses on the impact of financial constraints on firms' cash holding decisions and how such decisions differ among listed companies on the two stock exchanges of Vietnam. Using the data collected from 102 listed companies on the Vietnamese Stock Exchanges and qualitative research methods, the study finds a positive correlation between financial constraints and cash holdings. The study also shows excessive cash holding for businesses listed on Ho Chi Minh Stock Exchange. The findings can help Vietnamese enterprises take proper measures to overcome current and future financial difficulties.

Keywords

• doanh nghiệp niêm yết
• hạn chế tài chính
• nắm giữ tiền mặt