Cash holding and Firm’s Value: Evidence from Tunisian Market

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Author	Basty Nadia
ISSN	2307-2466
On Pages	1-8
Volume No.	5
Issue No.	1
Issue Date	March 01, 2020
Publishing Date	March 01, 2020
Keywords	Ownership structure, financial constraints, Firm’s value, corporate governance

Abstract

This paper mainly aims to explore the relationship between cash holdings, firm value and corporate governance of Tunisian firms. We empirically show the existence of an optimal level of cash that maximizes firm’s value. To test the validity of the identified theoretical assumptions, an empirical study based on a sample of listed Tunisian firms over the period 2003-2013 is done. Our results show a concave relationship between cash holding and firm’s value which states the existence of an optimal level of cash holding. In addition, we prove that deviations from this optimal level of cash holding decrease firm’s value.

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