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Impact of financial constraints and financial distress on cash holdings

Elżbieta Bukalska
Elżbieta Bukalska
 und 
Anna Maziarczyk
Anna Maziarczyk
   | 31. März 2023
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Article Category: Empirical Paper
Online veröffentlicht: 31. März 2023
Seitenbereich: 13 - 31
Eingereicht: 05. Apr. 2022
Akzeptiert: 14. Dez. 2022
DOI: https://doi.org/10.2478/ijme-2022-0032
Schlüsselwörter
© 2023 Elżbieta Bukalska et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.

Variable specification and expected impact of variables on cash holdings

Variable Formula Expected sign of impact on cash holdings
DV
Cash ratio Cash and cash equivalentsTo total assets minus cash and cash equivalents (%) NA
IV
KZ index Kaplan–Zingales index of financial constraints “ + ”
Z-score Altman Z-score of financial distress “-” for normal time“+” for crisis time
Crisis 1 for crisis time (2009, 2020), 0 otherwise “ + ”
CVs
Size Natural logarithm of total assets “-”
Profitability Operating profit to total assets (%) “ + ”
Debt ratio Total liabilities to total assets (%) “-”
Asset turnover Sales revenue to total assets (%) “ + ”

Regression analysis results with LnCash as DV and KZ index/Z-score as independent variable

Whole period Whole period
KZ index         0.003 Z-score         0.024***
Crisis         0.025** Crisis         0.025**
Size         0.817*** Size         0.819***
Profitability         0.041*** Profitability         0.041***
Debt ratio       −0.013 Debt ratio           X
Asset turnover         0.055*** Asset turnover         0.056***
R square         0.669 R square         0.669
F statistics 1,479.041*** F statistics 1,778.564***

Descriptive statistics of variables (mean and median) in normal and crisis times

Normal times Crisis times U Mann–Whitney test
Cash ratio     9.3   10.5 −3.227***
    5.7     7.1
KZ index 213.2 268.5 −1.645*
    3.9     4.4
Z-score     7.5     7.2 −0.849
    7.0     7.0
Profitability     1.8     1.4 −1.672*
    3.7     3.4
Debt ratio   50.3   51.9 −0.939
  49.2   50.2
Asset turnover 104.0   99.1 −1.154
  91.8   88.9

Descriptive statistics of the variables included in the research

Variables Mean Median Min Max SD
Cash ratio 9.4 5.9 0.2 45.1 10.3
KZ index 220.8 4.0 −120.2 6,615.9 1,043.7
Z-score 7.5 7.0 −4.8 20.6 4.4
Profitability 1.8 3.7 −5.0 31.5 14.7
Debt ratio 50.5 49.4 8.9 119.8 23.2
Asset turnover 103.3 91.4 8.4 340.5 76.6

Regression analysis results with the cash ratio as the DV and KZ index as the independent variable

Whole period Whole period Whole period Crisis time Crisis time Normal time Normal time
1 2 3 4 5 6 7
KZ index −0.072***(1.000) −0.090***(1.009) −0.032*(1.096) −0.046(1.000) −0.003(1.128) −0.078***(1.000) −0.037*(1.085)
Crisis X 0.044**(1.000) 0.050**(1.002) X x x X
Size X X −0.168***(1.118) X −0.126**(1.091) −0.175***(1.123)
Profitability X X 0.083***(1.350) X 0.050(1.459) 0.088***(1.338)
Debt ratio X X −0.184***(1.228) X −0.148**(1.404) −0.191***(1.274)
Asset turnover X X 0.072***(1.206) X 0.085*(1.235) 0.070***(1.203)
R square 0.005 0.042 0.094 0.002 0.057 0.006 0.101
F statistics 22.975*** 65.684*** 76.763*** 1.283 7.234*** 23.257*** 85.226***

Regression analysis results with cash ratio as DV and Z-score as independent variable

Whole period Whole period Whole period Crisis time Crisis time Normal time Normal time
8 9 10 11 12 13 14
Z-score 0.373***(1.000) 0.372***(1.019) 0.389***(1.454) 0.338***(1.000) 0.397***(1.537) 0.381***(1.000) 0.388***(1.447)
Crisis X 0.050***(1.001) 0.053***(1.001) X X x X
Size X X −0.114***(1.125) X −0.093*(1.061) −0.118***(1.137)
Profitability X X −0.055**(1.582) X −0.121*(1.712) −0.044*(1.567)
Debt ratio X X X X X X X
Asset turnover X X 0.102***(1.141) X 0.110**(1.140) 0.101***(1.142)
R square 0.139 0.142 0.168 0.114 0.143 0.145 0.173
F statistics 713.217*** 243.569*** 179.212*** 77.705*** 24.926*** 645.321*** 198.399***
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