Impact of cash holdings on financial performance at Vietnamese firms with state ownership as a moderating variable

Abstract

The aim of this paper is to access the moderating role of state ownership on the impact of cash holdings on financial performance at Vietnamese firms. The research sample is 399 non-financial firms listed in Vietnam in the period 2015-2020, selected by the purposive sampling method. The research data is collected from financial statements and stock trading statistics of FiinGroup Corporation’s FiinPro system. With the estimated results according to the basic methods for panel data analysis, we determined that FEM is more suitable than Pooled OLS and REM; however, the model has autocorrelation and heteroskedasticity problem. As a result, we used the GLS estimation method to fix them. The final result concludes that cash holdings and state ownership have positive effects on financial performances of firms, and state ownership plays a moderating role to increase the impact of cash holdings on financial performance; accordingly, the article recommends cash management from a financial view in non-financial firms with state ownership as a moderating variable.