EFFECT OF CASH HOLDING ON FINANCIAL PERFORMANCE OF QUOTED INSURANCE FIRMS IN NIGERIA
Keywords:
: Cash Holding, Financial Performance, Return on Equity, Return on Asset, Quoted Insurance FirmsAbstract
This study investigated the effect of cash holding on financial performance of quoted insurance firms in Nigeria. The study is vital as it portrays the extent to which cash holding influences firm financial performance in Nigeria. The study specifically seeks to determine the effect cash holding on return on equity and return on asset of quoted firms in Nigeria. Financial performance was proxy these variables in the study; return on equity and return on assets while cash holding on the other hand was represented by the ratio of cash and cash equivalent to total assets. Two hypotheses were formulated to guide the study and the statistical test of parameter estimates was conducted using Panel least squares regression model. Ex Post Facto design was adopted and data for the study were obtained from the Nigerian Exchange Group Factbook and published annual financial reports of quoted insurance firms in Nigeria spanning 2015-2023. The results of the study showed that cash holding has positive and significant effect on firm performance at 1% significant level. Thus, the study concluded that cash holding determines corporate financial performance in Nigeria. The study therefore recommends amongst other that, managers should consider the financial condition of a firm when determining the optimum cash holdings due to its different effects since optimum cash holdings ensure firm net assets value.
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