DETERMINANTS OF CORPORATE CASH HOLDING IN HOSPITALITY SECTOR OF FRANCE: ADOPTING TWO-STEP SYSTEM GMM ESTIMATION TECHNIQUE

Abstract

The study analyzes the impact of determinants of corporate cash holdings on the hospitality sector of France for a period of thirteen years i.e., from 2005-2018. In addition, this study also captures the sub-sectors and time effects on the cash management of the travel and leisure sector of France. The study plugs in the two-step system GMM (Generalized Method of Moments) for undertaking the estimations. Two models have been estimated i.e., the first model is without the sub-sectors and time effects, while the second model includes both the time-invariant factors. For the estimation of results, the two-step System GMM has been adopted. The determinants of cash holdings i.e., firm size, leverage, and cash flow capture a negative coefficient in the hospitality sector of France and shows that France does not retain liquid cash and supports the trade-off theory, while the positive coefficient of Capital expenditure, and growth opportunity, cash flow volatility, asset intangibility and dividends show that France retains more liquid cash and supports both pecking order and free cash flow theories. Furthermore, in Table 4, insignificant p-value in sub-sector and time effect shows that they have no individual effects on cash holding.