Purpose: This paper aims to explore the relationship between cash holdings and the cost of debt, while examining the moderating effects of ownership structure and operating risk on this relationship.
Design/Methodology/Approach: The study is conducted on a sample of
100 French companies listed on the SBF120 index, covering a five-year period
from 2011 to 2015. Quantitative methods are employed to analyze the influence
of cash holdings on debt costs, while accounting for the moderating roles of
ownership structure and operating risk. Data are drawn from the financial
statements and reports of these firms.
Findings: The findings reveal a significant and negative effect of
cash holdings on the cost of debt. Firms that maintain higher liquidity levels
face lower borrowing costs. Additionally, ownership structure and operating
risk are found to influence the strength of this relationship.
Originality/value: This research provides insights into the
financial strategies of French listed companies, emphasizing the importance of
liquidity in mitigating borrowing costs. It also sheds light on the roles of
ownership structure and risk management in shaping financial outcomes. The
study offers practical recommendations for firms seeking to balance cash
holdings and financing costs.
Author
(s) Details
Souad Chaieb
Higher Institute of Management, University of Sousse, Tunisia.
Please see the book here:- https://doi.org/10.9734/bpi/nabme/v4/4316
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