منابع نقدی در شرکت های خصوصی و داد و ستد عمومی چه نقش تعیین کننده ای دارند؟ مدارک و شواهد از 20 بازار نوظهور

We provide one of the first large sample study to examine how firm-level characteristics and national-level institutions affect cash balances in privately held and publicly traded firms and investigate whether the determinants of cash holdings for both types of firms are similar. Using panel analysis for data we analyse a sample of 9,453 private versus 7,319 public firms and 104,571 firm-year observations from Central and Eastern Europe over the period 2001–2010. We first show that privately held firms tend to hold more cash than publicly traded firms. Second, firms in more market-oriented countries, according to transition indicators, have larger cash reserves. Third, the same determinants of cash balances are relevant for both privately held and publicly traded firms regardless the stage in the transition to capitalism systems.

Corporate holdings of cash reserves have been widely discussed in academic literature. However, the majority of such studies have focused on analysis of large companies listed on stock exchanges. These firms presumably have strong relationship with capital markets, and therefore there is less need for cash reserves as precautionary measures in contrast to privately held companies. As other reasons to accumulate cash could be stated costly agency problems and transaction costs, cash as low cost financing, limited access to external financing, external costs of capital created by information asymmetry. The recent strand of academic papers highlighted the importance of the determinants of cash holdings. However, only a few of them such as Gao, Harford, and Li (2013), Bigelli and Sanchez-Vidal (2009) and Gogineni, Linn, and Yadav (2012) investigated cash holdings in private firms with the results based on a single-country analysis. Another strand of academic papers raised the question whether market-based systems outperform bank-based system. Even the evidence is controversial it shows that the structure of the financial system and its level of development matters. To continue, Aggarwal and Goodell, 2009a and Aggarwal and Goodell, 2009b argue that national preferences for market financing increase with political stability, social openness and economic inequality, and decrease with regulatory quality and ambiguity aversion. Hence, different access to financing, different level of development of financial institutions, national characteristics, social openness, level of corruption and creditor protection might affect the overall performance of the companies and countries itself. Consequently, it might impact the fraction of cash holdings in privately held and publicly traded companies. Hence it is important to distinguish the differences in cash holdings in listed and non-listed firms, investigate how it differ for more and less market developed countries and answer the question whether the determinants of cash holdings are the same for both public and private companies. In this paper, we examine cash holding behaviour of privately held and publicly traded companies in Central and Eastern Europe with a sample of 16,772 listed and private companies from twenty countries over the period 2001–2010. This region is distinctive and ideal for our purpose due to the major transformation of economic relationship after the collapse of communism and transition from centrally planned to a market economy. In accordance with the view of Brown, Jappelli, and Pagano (2009) we argue that it is an interesting sample to study because this region has recently experienced both strong credit market development and considerable institutional change however still in different stages in the transition to capitalism system that gives us a unique opportunity to investigate the determinants of cash holdings in both more market developed and less market developed countries. Moreover, it has even higher importance due to the growing economic significance of emerging markets of Central and Eastern Europe and position within the European Union (Schotman & Zalewska, 2006). Our paper contributes to the literature on cash holding on several grounds. First, we examine how different conditions like easier access to the markets, foreign direct investments, entry of new competitors, better legislation, protection of minority shareholders and more developed financial institutions (in short “transition indicators”) affect cash holdings of privately held and publicly traded firms in countries with similar initial conditions of geography and history. Second, we analyse whether privately held firms follow more the “precautionary motive” then publicly traded firms and whether it varies according to the level of markets development. Third, since after the initial period of output decline (1990–94) Central and Eastern European countries went through different policy reforms that brought them into different stages of economic development and market orientation our next contribution is to investigate whether the firm-specific determinants in corporate cash holdings in more market-oriented economies differs from less market-oriented countries. Martinsson (2010) argues that market-based financial systems outperform the bank-based economies of Continental Europe. Our paper extends the work and provides more insights on the differences between market-based and bank-based countries with the focus on Central and Eastern European countries. Beck, Demirgüç-Kunt, and Maksimovic (2008) discuss how different stages of economic developments affect the determinants of financing patterns using data based on a cross-country survey with a wide coverage of large firms and SMEs. Using a comprehensive set of data of large and small-medium sized firms we extend the discussion to how institutional development affect the determinants of cash holdings that has important policy and resource implications. We found that independently of the country development stage privately held firms tend to hold more cash than publicly traded firms. This could be explained by the fact that listed firms have easier access to capital markets than private firms. Hence, private firms might face higher barriers to external financing leading as a result to financial constraints. Therefore excessive cash can play the role of a buffer against future financial distress. In general, profitable firms generate more cash than less profitable firms do. The determinants of cash holdings are similar to both privately held and publicly traded firms excluding their size. Publicly traded firms show less impact from size and private firms becoming larger reduce their amount of cash that might be explained as becoming less concerned about bankruptcy and financial distress. Private firms are more profitable and have higher level of short-term debt, on average. One of the main findings in our paper is that companies in market-oriented countries and countries in transition to an open-oriented economy hold more cash reserves than companies in the countries at lower stage of economic development. This could be explained from two perspectives. First, cash-rich companies are more profitable (Bigelli & Sanchez-Vidal, 2009) and since our results support that firms in more market-oriented countries are more profitable they will tend to hold more cash. Second, even though borrowing costs are lower in market oriented countries, the better creditor protection (often associated with better institutions more generally) with improved rule of law, could increase the likelihood of bankruptcy if a company has financial problems and therefore shareholders might be oriented to choose a more conservative policy and increase cash reserves in order to fill the commitments of the firm. In addition, results display that maturity expressed as non-current liabilities over total liabilities has a negative impact on cash reserves. However, for the sub-sample of countries that are not part of the European Union and with transition indicators below the average, maturity has a positive effect in cash holdings which might indicates that in less developed countries companies cannot obtain a financial advantage that allows them to use financing alternatives in their favour and having more long term debt they tend to accumulate larger cash holdings as a precautionary motive. Our results shed lights on whether transition economies have some common characteristics in the cash holding behaviour of privately held and publicly traded companies. This paper will be interesting for policymakers and will encourage further discussions among academics. The rest of the paper is organised as follows. Section 2 is dedicated to the literature review and motivates the central hypothesis. Section 3 presents the data sources and discusses sample selection and financial information. In section 4 we test whether cash balances for private and public firms and for countries in diverse stages of development towards to free market are different. Section 5 the model and variables used in the empirical analysis to test the effect of firm and country specific characteristics are discussed. Results are presented in Section 6 and Section 7 concludes.

The study of how firm-level characteristics and national-level institutions affect cash balances of both privately held and publicly traded companies have been largely ignored in the literature. The understanding of such determinants for both private and public companies and the role of the development of financial institutions, level of corruption, creditor protection and other national determinants would be important to policymakers and will encourage further discussions among academics in particular in countries where the national institutions are still very much in evolution. This paper constitutes the first large sample study to examine how firm-level characteristics and national-level institutions affect cash balances of both privately held and publicly traded companies. Using panel analysis for data we examine a unique sample of 16,772 firms from Central and Eastern Europe and 104, 571 firm-year observations for the period 2001 to 2010. The paper set out to address three research questions: Do national level institutional characteristics affect firm-level cash holdings? Second, do the factors that determine cash holdings at publicly traded firms also affect cash holdings at privately held firms – does listed status or size matter? Third, do privately held firms follow more the “precautionary motive” then publicly traded firms and whether it varies according to the level of markets development? The empirical results support three main findings. First, private firms tend to hold more cash than publicly traded firms. Second, firms in countries that are more market-oriented and that foster entrepreneurship have larger cash reserves, despite a presumably stronger precautionary motive for cash holdings in countries with less market orientation. Third, the same determinants of cash balances are relevant for both privately held and publicly traded firms regardless the stage in the transition to capitalism systems.