Effect of corporate cash holding on firm performance: Evidence from Vietnamese listed companies

Abstract

The study examines the impact of cash holdings on firm performance measured by return on total
asset ROA and return on equity capital ROE. Using OLS, Fixed effect and GMM method to account for the
endogeneity problem, the study shows the positive impact of cash holdings on the financial performance of
listed companies in Vietnam during 2013- 2021. An increase in cash holding ratio helps businessed maintain
solvency, creating resources for businesses to proactively take advantage of business opportunities, thereby
improving the firm performance.