Determinants Of Cash Research Articles

An Analysis on Determinants of Cash and L/C Export: Findings from Türkiye’s Export

The payment methods used in international trade are of significant importance for the financial flow of the involved parties. When it comes to transferring goods and funds across borders to their new owners, the risks faced by the parties may seem daunting. The use of a letter of credit payment method by banks serves a protective role, enabling the parties to engage in trade more securely. While the expenses linked to this approach are sometimes viewed as challenging for the involved parties, it is considered a significant enabler, particularly in new trade alliances. In fact, exporters' choices are classified in countries' trade statistics based on payment methods. This study aims to uncover the determinants of exports from Türkiye between January 2013 and September 2023, utilizing both cash in advance and letter of credit payment methods. To accomplish this objective, exchange rates and specific inflation indicators, and their causal relationship with export transactions based on payment types was examined using the Toda-Yamamoto causality test. The research findings indicate that exchange rates, inflation, and cash payment variables cause letter of credit payments. Conversely, only the foreign producer price index was identified as a cause for cash-based exports. These findings illustrate that economic indicators, which may pose risks for Turkish exporters, are reasons for important decisions. In light of these findings, recommendations have been made for exporters and policymakers to proceed cautiously in the face of different economic scenarios.

The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

The choice of the means of exchange is one of the critical decisions in mergers and acquisitions. Travel agencies and tour operating-industries compete in a volatile environment, and in addition to generating economies of scale, investments in the industry involve important sunk costs. This paper’s focus is on the determinants of the medium of exchange in mergers and acquisitions in the travel and tour-operating industries. Previous research on the ‘law and finance’ perspectives argues that some country of origin legal systems offer better investment protection to investors. Accordingly, civil law-based systems offer weaker protection to investors when compared to common-law-based systems. For this purpose, we use a logistics regression to model the determinants of cash in a sample of 750 mergers and acquisitions by combining the research streams above. Our results provide evidence of the relationship between investor protection and the use of cash.

Cross institutional cash and dividend policies: focusing on Brazilian firms

This article analyses the determinants of cash holding and dividends and the relation existing between them in the institutional framework of Brazil, an emerging market on the world scenario. It also presents specific cultural and institutional characteristics. Through the panel data methodology, we show how peculiar the behaviour of Brazilian firms is, surprisingly quite different from the traditional theories and stereotypes. It was found that they have lower cash holdings and pay higher dividends compared to the UK market. In addition, analysis of the relation between these two policies showed a positive relation, together with other closely related items such as the relevant effect of profitability and investment opportunities. All this leads us to confirm the importance of the institutional framework in the financial decisions taken in the Brazilian market.

The Determinants of Target Cash Holdings and Adjustment Speeds: An Empirical Analysis of Chinese Firms

This study examines the determinants of target cash reserves among publicly listed Chinese firms in the 1998 to 2009 period, and how actual levels of cash holdings adjust towards target cash reserves. The consistency of the determinants of cash reserves with the static trade-off, pecking order and the free cash flow theories, in so far as they relate to cash holdings of firms, are also evaluated. Results of the study support the existence of target cash reserves in Chinese firms, and that they are a function of a range of firm specific characteristics that include leverage, cash flow, dividend payout, liquidity, tangibility, investment opportunities, managerial ownership, and ownership concentration. Results further suggest that contrary to expectations, the adjustment speed towards target levels are quite rapid and similar to the adjustment speeds observed in longer established markets.