Determinants of Cash Holding in Basic Materials Companies Listed on the Indonesia Stock Exchange
Year: 2026
Type: article
Abstract: Purpose: This study examines the relationships between profitability, net working capital, capital expenditure, and cash holding in IDX-listed basic materials companies during 2021–2025.Research Methodology: Purposive sampling yielded 78 companies and 390 company-year observations. After removing 10 outliers, 380 remained; the final ANOVA implies 379 regression observations. SPSS 26 was used for a natural-log model with the reported Cochrane–Orcutt adjustment.Results: Profitability and net working capital have positive significant coefficients (p < 0.001); capital expenditure is insignificant at 5% (p = 0.596). The joint test is significant (F = 39.739; p < 0.001). R-squared is 0.241 and adjusted R-squared is 0.235.Conclusions: The reported associations support H1, H2, and H4, but do not establish causal effects or an optimal cash balance.Limitations: The findings depend on sample and estimation adjustments. Cash-inclusive working capital, the asset-change investment proxy, omitted variables, and diagnostic limitations restrict interpretation.Contributions: This study extends contemporary corporate liquidity research by integrating trade-off theory, pecking order theory, and precautionary cash-holding motives to explain corporate cash accumulation. The findings provide sector-specific evidence that profitability and working capital are positively associated with cash reserves, while capital expenditure shows no significant relationship, offering insights into liquidity management in emerging markets.
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7225317125