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Keywords

Liquidity
Trade
off theory
pecking order theory
cash flow
Leverage
net working capital
firm size
firm market value
industrial firm
Amman Stock Exchange

Abstract

This paper investigates the empirical determinants of liquidity (cash and near cash assets) for a sample of industrial Jordanian firms over the period 2001-2010. The study focus on the importance of cash flow, business risk, liquid assets substitutes, leverage, ability to access capital markets, dividend's payment policy, investment (growth) opportunities. Our results show that both trade-off and pecking order theories play an important role in explaining the determinants of cash liquidity of Jordanian firms. The results of this study generally support the trade-off theory of cash holdings. Precautionary and transaction motives play important roles in explaining the determinants of investments in cash and near cash assets for Jordanian firms. Growth opportunities, cash flows, liquid assets substitutes, and leverage are the important determinants of corporate short-term investments in liquid assets in Jordan.
https://doi.org/10.33899/tanra.2019.161582
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