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Author: 陳亨康
Hector Genesis Domingo Salatan
Thesis Title: The impact of regulatory environment and financial factors on corporate cash holdings: Evidence from selected South East Asian countries
The impact of regulatory environment and financial factors on corporate cash holdings: Evidence from selected South East Asian countries
Advisor: 謝劍平
Joseph C.P. Shieh
Committee: 劉代洋
Day-Yang Liu
陳俊男
Chun-Nan Chen
Degree: 碩士
Master
Department: 管理學院 - 財務金融研究所
Graduate Institute of Finance
Thesis Publication Year: 2020
Graduation Academic Year: 108
Language: 英文
Pages: 75
Keywords (in Chinese): cash holdingstrade-off theorypecking order theoryfree cash flow theoryease of doing business
Keywords (in other languages): cash holdings, trade-off theory, pecking order theory, free cash flow theory, ease of doing business
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Using a sample of 6,464 firm-year observations from selected countries in South East Asia from 2013 to 2018, this study attempts to explore the financial determinants and the impact of regulatory environment on corporate cash holdings by applying pooled ordinary least squared regression and panel data analysis. Furthermore, the study is conducted in two phases. The first phase studies the relationship of cash holdings with financial factors while the second stage addresses the impact of regulatory environment on cash holdings. Based on the regression results, size, cash flows, working capital, and leverage negatively influences cash holdings while growth, cash flow variability, and dividend payments have positive relationship with cash holdings. Furthermore, consistent with the research’s argument that better regulatory environment leads to lower costs and better operating results allowing firms to save higher levels of cash, our second research model shows that better regulatory environment have a positive effect on a firm’s cash holdings.

ABSTRACT 4 ACKNOWLEDGEMENT 5 LIST OF CONTENTS 6 LIST OF TABLES 9 LIST OF FIGURES 10 APPENDICES 11 CHAPTER 1: INTRODUCTION 12 1.1 Research background 12 1.1.1 Cash holdings 12 1.1.2 ASEAN region and economy 12 1.2 Research problem 14 1.3 Purpose of the study 15 1.4 Scope of research 15 1.5 Organization of study 16 CHAPTER 2: LITERATURE REVIEW 17 2.1 Theoretical framework 17 2.1.1 Trade-off theory 17 2.1.2 Pecking order theory 17 2.1.3 Free cash flow theory 18 2.2 Determinants of cash holdings 18 2.2.1 US, UK, and other developed countries 18 2.2.2 China and other emerging markets 21 2.2.4 Southeast Asian Region 22 2.4 Effects of regulatory environment on doing business 23 CHAPTER 3: RESEARCH METHODOLOGY 30 3.1 Hypothesis development 30 3.1.1 Size 30 3.1.2 Cashflows 31 3.1.3 Cash flow variability 32 3.1.4 Leverage 32 3.1.5 Dividend payments 33 3.1.6 Net working capital 34 3.1.7 Growth opportunities 35 3.1.8 Regulatory environment 36 3.2 Data 3.2.1 Data source and description 38 3.2.2 Sample size 38 3.3 Variable 39 3.3.1 Dependent variable 39 3.3.2 Independent variables 39 3.4 Research model 43 3.4.1 A common model for cash holdings in SEA 43 3.4.2 Ease of doing business and cash holdings 45 CHAPTER 4: EMPIRICAL RESULTS AND DISCUSSION 47 4.1 Evaluation of the research model 47 4.1.1 Multicollinearity 47 4.1.2 Autocorrelation 48 4.1.3 Heteroskedasticity 49 4.2 Panel Data Analysis 50 4.2.1 F test 50 4.2.2 Hausman Specification Test 51 4.3 Descriptive statistics 52 4.3.1 Cash ratio by country 52 4.3.2 Independent variables average per country and over-all descriptive statistics 53 4.4 Regression results 55 4.4.1 A common model for cash holdings in SEA 56 4.4.2 Ease of doing business and cash holdings 60 CHAPTER 5: CONCLUSION AND RECOMMENDATION 62 5.1 Conclusions 62 5.2 Recommendations for future research 65 REFERENCES 66 APPENDICES 72

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