The Impact of Cash Holdings on the Performance of Manufacturing Firms

Abstract

Purpose: Cash plays a crucial role in enhancing liquidity and financial flexibility. This study aims to examine the impact of cash holdings on the operational performance of manufacturing firms listed on Vietnam’s stock market.
Design/methodology/approach: The research employs panel data from 175 manufacturing firms over the period 2010–2023. Pooled OLS, FEM, REM, and FGLS regressions are applied to ensure the robustness and reliability of the results.
Findings: Cash holdings have a positive impact on firm performance, indicating that maintaining an appropriate cash level enhances liquidity and financial flexibility. In addition, fixed asset investment and revenue growth positively affect firm performance, while firm size exerts a negative effect.
Originality/value: This study provides empirical evidence on the effect of cash holding policies on the performance of manufacturing firms in Vietnam. The findings offer practical financial policy implications to optimize cash management and improve firm efficiency.