Published : 2018-09-14

Determining the factors of cash holdings – the case of Romanian non-financial companies

Iuliana Oana Mihai

Riana Iren Radu

Bogdan George Dragan


The significant increase in company cash holdings has drawn the attention of the academic world. As a result, there is now extensive academic literature which investigates the relationship between cash holdings and their impact on corporate performance and company values. The study focuses on the motives, determinants and theories of cash holdings. The main objective of the paper was to investigate the determinants of cash holdings for Romanian companies for the period 2006-2015. The findings suggest that, for nonfinancial companies, cash holdings are influenced by the state of the economy. In times of recession, cash could be a good way to ride out the storm without having to ask for extra funding. Thus, companies tend to use internally generated cash before seeking external financing. In order to analyse the determinants of cash holdings, this study makes use of company level data for listed companies on the Bucharest Stock Exchange (BSE). The data was gathered from multiple sources; however the main source was the Amadeus database, which comprises data on almost 20 million companies in Europe. This database allows the user to search by multiple criteria (for instance: geographic, NACE codes, financial criteria, ownership, etc.). The data in the database is collected by the supplier of this database, Bureau van Dijk, therefore the data is reliable. Other data necessary for the study was gathered from the BSE website, the website of the Central Depository – an institution adjacent to the BSE - or was extracted from the individual financial reports available on the webpages of the companies.


cash holdings, trade-off theory, pecking order theory, agency costs, assets





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Mihai, I. O. ., Radu, R. I., & Dragan, B. G. . (2018). Determining the factors of cash holdings – the case of Romanian non-financial companies. Forum Scientiae Oeconomia, 6(3), 53–65.

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