No abstract

This study aims at analyzing whether ownership structure (i.e., if a firm is a group affiliate or standalone) affects cash holdings of manufacturing firms in India. It also makes a comparative analysis of the drivers of cash holdings such as firm size, growth opportunities, leverage, cash flow, dividend, net working capital, R&D, tangibility, profitability, and firm age for group affiliated and standalone firms. By applying a fixed-effect model with a sample of 500 firms over a period from 2007 to 2019, the study reveals that group affiliates accumulate less cash than standalone firms. Further, this paper demonstrates that the impact of drivers of cash holdings also differs between the group affiliate and standalone firms.The study carries a lot of significance to the managers in understanding the dynamics between ownership structure and cash holdings and deciding the appropriate level of cash by considering firm characteristics in the light of ownership structure. The findings are also useful for bankers, regulators, credit rating agencies, investors in assessing the cash holding behavior of firms with respect to the ownership structure.