Abstract
This thesis investigates the determinants and value relevance of corporate cash holdings among Saudi-listed non-financial firms. While corporate cash holdings have been widely studied in developed markets, evidence from emerging economies, particularly Saudi Arabia, remains limited. The Saudi context, characterised by concentrated family ownership, significant government shareholding, and the influence of Islamic finance, provides a distinct setting to examine these financial decisions. The period under study coincides with major economic reforms under Vision 2030, which have introduced changes to the financial market structure and corporate governance environment, making it important to understand how firms manage liquidity in this evolving context.The research applies panel data regression analysis on 750 firm-year observations between 2017 and 2022 and is supported by semi-structured interviews with managers and investors. The results show that firm-specific financial variables—profitability, leverage, firm size, dividend payments, growth opportunities, cash flow, and accounts payable—are significant determinants of cash holdings. Ownership structure, particularly family, institutional and government ownership, also plays an important role. Shariah compliance does not have a significant impact on cash holdings, challenging some assumptions from previous studies in Islamic finance contexts. Macroeconomic factors, including oil prices and interest rates, are also found to influence firms’ liquidity decisions. The value relevance analysis, based on an extended Ohlson (1995) model, shows that cash holdings are informative for equity valuation, with results varying depending on firm characteristics such as size and profitability.
The interview findings support the quantitative results by providing further insights into the motives behind cash holding decisions. Managers highlight precautionary motives, agency concerns, and signalling effects, while investors point to the importance of transparency and efficient use of liquidity. This study contributes to the corporate finance literature by providing evidence from a relatively under-researched emerging market and offers implications for policymakers, managers, and investors aiming to improve financial practices and governance standards in Saudi Arabia.
| Date of Award | 2025 |
|---|---|
| Original language | English |
| Awarding Institution |
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| Sponsors | Qassim University |
| Supervisor | David Power (Supervisor) & Renzo Cordina (Supervisor) |
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