The Determinants of Corporate Cash Holdings Among Listed Firms in Nigeria

Corporate cash holding decisions reflect the strategic trade-off between the opportunity cost of holding liquid assets and the precautionary and transactional motives for maintaining cash buffers. This study investigates the determinants of cash holdings among companies listed on the Nigerian Exchange Group, using panel data from audited financial statements of 60 firms across consumer goods, industrials, and healthcare sectors for the period 2018 to 2022. The independent variables examined include firm size, growth opportunities, cash flow volatility, financial leverage, dividend payout, and capital expenditure requirements. Regression analysis using the pooled ordinary least squares and generalised method of moments estimators is applied to control for endogeneity in the model. The theoretical framework draws on the trade-off model, the pecking order theory, and the free cash flow hypothesis attributed to Jensen. The study evaluates whether the precautionary motive has become more dominant in the post-COVID environment, where access to credit markets tightened significantly for Nigerian firms. The analysis also considers whether cash holdings differ systematically across firms by sector and ownership structure, including state-owned versus privately held entities. Existing international literature confirms the importance of firm-specific factors in cash holding decisions, though Nigerian evidence remains limited and often dated. This study contributes an updated and sector-specific analysis of cash holding behaviour with practical implications for treasury managers, institutional investors, and the Nigerian Exchange Group's financial analysis community. Keywords: corporate cash holdings, liquidity, listed firms, Nigeria, trade-off theory