Changes in cash levels of public companies in Poland in the period 2001–2019

Abstract

Background: The subject of this paper is related to cash management and determinants of companies’ cash holdings within the framework of corporate finance theory. One phenomenon that has received considerable attention is the upward trend in cash holdings of US public firms, which has been explored in a number of US studies. There are no studies explaining whether cash management trends in Poland are similar to those observed in the biggest world economy. In empirical studies devoted to cash management in Poland, the analysis of aggregate data has been of little interest.
 Research purpose: The focus of this article is on presenting the course of changes in cash holdings maintained by public companies listed on the Warsaw Stock Exchange in the period from 2001 to 2019 and explaining them in the framework of corporate finance theory.
 Methods: Changes in the average and aggregate cash-to-assets ratio were analysed. In order to determine how these changes of cash-to-assets ratios are explained with changes of selected macro- and microeconomic variables, linear regression models for firm-averages and panel data models were estimated.
 Conclusions: The study shows that changes in cash holdings of listed companies in Poland differed from the trends observed among big US corporations. It also indicates that companies’ approaches to cash management were very much aligned with that explained by the finance theory