The impact of cash and cash equivalents holding ratio on the financial performance of listed technology firms in Viet Nam

Abstract

In the context of increasing economic uncertainty driven by the COVID-19 pandemic, monetary policy fluctuations, and the accelerating digital transformation, cash holdings have become a crucial element in corporate financial strategy. For technology firms characterized by rapid growth, short innovation cycles, intangible assets, and high levels of risk maintaining an appropriate level of liquidity plays an even more important role in sustaining performance and firm value. This study examines the impact of cash holding ratios on financial performance, measured by ROA and ROE, using data from 67 technology companies listed on HOSE and HNX during the period 2019- 2024. A quantitative research approach was employed, with the Generalized Least Squares (GLS) regression model applied to address heteroskedasticity and autocorrelation issues in panel data. The results indicate that cash holdings have a positive and statistically significant effect on financial performance, although the magnitude of the impact differs between consolidated and separate financial statements. These findings highlight the importance of cash management policies in optimizing capital efficiency, provide investors with valuable insights for evaluating corporate financial strategies, and offer implications for regulators in designing financial policies tailored to the characteristics of the technology sector.