Abstract
A significant number of studies have been conducted on the determinants of cash holding levels for different corporates. However, no such study has been witnessed so far on the agricultural enterprises. In this study, we examine the determinants of the cash-holding levels for the Indian agrarian enterprises during 1995–2016 period. With the help of weighted least-squares (WLS) regression analysis, we find evidence that the Indian agro-enterprises with greater lucrative opportunities tend to hold less cash. On the other side, we found that large agro-enterprises tend to hold some other mode of liquid assets rather than cash. The firms with higher capital expenditure and distributing profits as a dividend were shown to hold more cash. In our analysis, we find supportive evidence of the static trade-off theory of cash holding. In general, transaction motives and precautionary motives also play an important role in explaining the determinants of cash holding levels for Indian agrarian enterprises.
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