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THE DETERMINANTS OF CASH HOLDINGS OF FIRMS’ IN TRANSITION COUNTRIES:A SPATIAL DATA ANALYSIS

THE DETERMINANTS OF CASH HOLDINGS OF FIRMS’ IN TRANSITION COUNTRIES:A SPATIAL DATA ANALYSIS. Mahmut Erdogan Department of Corporate Finance, Gazi University Ankara Turkey. Outline. Introduction Theory Data Variables Methodology Questions. Aim of the Study.

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THE DETERMINANTS OF CASH HOLDINGS OF FIRMS’ IN TRANSITION COUNTRIES:A SPATIAL DATA ANALYSIS

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  1. THE DETERMINANTS OF CASH HOLDINGS OF FIRMS’ IN TRANSITION COUNTRIES:A SPATIAL DATA ANALYSIS Mahmut Erdogan Department of Corporate Finance, Gazi University Ankara Turkey

  2. Outline • Introduction • Theory • Data • Variables • Methodology • Questions

  3. Aim of the Study • to provide empirical evidence on the determinants of cash holdings in transition economies regarding corporate governance

  4. Determinants of cash holdings

  5. Data • Datastream and Finnet • Turkey, Indonesia, Malaysia, India, Argentina, Brazil, Chile, Israel, Poland, Hungary • About 2000 firms • Excluded financial firms • 1996-2002

  6. VARIABLES • FINANCIAL • Cash: the ratio of cash and marketable securities to total assets • Growth opportunities: the ratio sales0/sales-1 • Size: the natural logarithm of sales • Leverage: the ratio of debt to shareholder equity • Ltdebt: long-term debt divided by total debt • Cash flow: pre-tax profits plus depreciation/total assets • Liquidity: the ratio of working capital less cash to total assets

  7. VARIABLES • INSTITUTIONAL • (La Porta et al.(1997)) • Creditor Right (0-4) • Antidirector Right (0-5) • Rule Law (0-10) • OWNERSHIP • (Faccio and Lang(2001)) • State • Instıtutıonal-financial institutions • Family

  8. Methodology • Static Panel Model (Opler et al. 1999) Dynamic Panel Data Model (Arellano and Bond, 1991 and Arellano and Bover,1995)

  9. partial adjustment model

  10. Methodology • Spatial Panel Data (Elhorst, 2003) • Spatial Lag Model (FSLM) • Spatial Error Model (FSEM)

  11. Further research • Are spatial panel data models applicable to dynamic panel data models? • If a firm has more than one production center in different location, which place can accept for geografical location?

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