This study aims to examine the impact of cash holdings in firms on investment decisions taken by managers for a sample of UK, US and Egyptian firms.
The author uses a sample of FTSE, S&P and EGX All-share firms for the period 2011–2018. Data were collected from Bloomberg datastream.
The results reveal that cash holdings have a negative impact on firm investment decisions considering the agency problem and conservative attitude of managers as an explanation for the association.
This study would be of importance to various stakeholders. Shareholders would be more aware when they understand how cash holdings influence their firm’s investment decisions. Corporations’ value and profitability would be affected by managers’ investment decisions.
Shareholders will try to invest in firms whose manager’s act in favor of them instead of being only risk averse and willing to protect their positions. Also, firms’ board of directors will keep an eye on the managerial attitude toward the investment decisions.
This paper adds to research by studying managers’ attitude of investment in the existence of cash holdings across both developed and developing countries.
