Using Analytical Hierarchy Process Methods in Cash Holding and Corporate Working Capital Management: an Asian Perspective

Jeffrey Edward Jarrett,Xia Pan,Wenjun Du

doi:10.12944/jbsfm.01.0102.05

Abstract

Cash holding behavior is an important financial behavior of the company, which reflects the company's financial strategy and management strategy. What are the factors that affect corporate cash holdings? How does the change in these factors affect the change in corporate cash holdings? Starting from two aspects of national macroeconomic environmental factors and microeconomic environmental factors, this paper tries to analyze these factors and how they affect corporate cash holdings. Working Capital Management is an important part of the company's financial management, which is closely related to the value creation of the company. What is the content of working capital management? How to manage the working capital effectively? This paper expounds the contents of working capital management from the perspective of process management, and expounds how to effectively manage working capital from the perspective of situational management. To link these two areas ids the goal of this study.

Highlights

The goal of accounting estimates is to provide investors with relevant and timely information about the prospects of a company
The goal of relevance comes at potential cost of reliability, because accounting estimates are fundamentally subject to management’s judgment, and are inherently susceptible to management bias and error in making such estimates
In one of its Releases, the Securities and Exchange Commission (SEC) states “The Commission issued cautionary advice to companies regarding the need for greater investor awareness of the sensitivity of financial statements to the methods, assumptions, and estimates underlying their preparation”