-
Journal menu
- General information
- Editorial Board and External Reviewers
- Journal Policies
- Publication Ethics and Malpractice Statement
- Instructions for authors
- Paper reviewing
- Article processing charge
- Feedback from stakeholders
- Journal’s Open Access statement
- Order hard copies of the journal
- 50 most cited papers in the journal
TESTING THE PARTIAL ADJUSTMENT MODEL OF OPTIMAL CASH HOLDING: EVIDENCE FROM AMMAN STOCK EXCHANGE
Download This Article
Ziad Mohammad Zurigat 
, Nadia Jawdat
Abstract
This study aims at testing the partial adjustment model of cash holdings to investigate whether Jordanian industrial firms have a target cash holdings and how fast they move toward that target when any target deviation exists. A sample of 57 industrial firms listed in the Amman Stock Exchange (ASE) over the period 2001-2013 is used. The study uses the estimated fitted values from the conventional cash equation as a proxy for the target cash holding. Using pooled and panel data analysis, the study provides evidence suggesting that cash flows, net working capital, leverage and firm size significantly affect the cash holdings of Jordanian firms. Moreover, it reveals that Jordanian industrial firms have a target cash level and make a target reversion whenever needed. However, Jordanian industrial firms adjust their actual cash holdings to its target level too slowly.
Keywords: Cash Holdings, Trade-off Theory, Pecking Order Theory, Agency Theory of Free Cash Flow, Partial Adjustment Model
How to cite this paper: Zurigat Z.M., Jawdat, N. (2015). Testing the partial adjustment model of optimal cash holding: Evidence from Amman stock exchange. Corporate Ownership & Control, 13(1), 15-23. https://doi.org/10.22495/cocv13i1p2
