Tariq Alzoubi
This study investigates how different stages in a firm’s life cycle affect their cash holding decisions. Previous research has focused on the fundamental factors that determine the cash level held by firms, while other research has focused on the value of cash held by firms, and how cash affects other corporate decisions. This research will consider a new dimension to cash holding decisions by considering firms’ life cycle stage and how it affects cash holding decisions. The study conducts a fixed effect panel data analysis on a sample of 141 non-financial listed firms from Amman Stock Exchange, over the period 2000-2016. By controlling for firm size, profitability, financial leverage and dividend paying, the results show that; during the introduction and growth stages, cash holding decisions are irrelevant, while during the maturity and decline stages, cash holding becomes significantly negatively related. Firm’s size and financial leverage are also significantly and negatively related to cash holding decisions, while firm’s profitability and dividend paying are significantly positively related to cash holding decisions.