Corporate Cash Holdings and Firm Value: Evidence of Nonlinear Effects Under Ownership And Shariah Governance in Pakistan

Abstract

This study analysed the differences between cash holdings change value when ownership and governance are different. The panel data from 100 firms listed on the Pakistan Stock Exchange over the period 2014–2024 has been collected. A cutoff model that finds a point where the link between cash holdings and firm value's not a line. The model shows a bend in the link, between cash holdings and firm value. The bend results that there is an amount of cash holdings that makes firm value highest. In short cash holdings that are too high hurt firm value and the right cash holdings lift firm value. Having cash or not enough cash hurts a company’s value. The drop, in value is bigger for family?owned firms and for firms. That shows that family ownership and religious rules make the cost of a cash policy higher. The results tell managers and policymakers that they must set cash management strategies carefully. They especially need to watch cash policies in family?owned firms and, in firms. By providing evidence from a developing economy with relatively weak governance mechanisms, this study extends the cash holdings literature and uncovers previously overlooked moderating roles of family ownership and Shariah compliance in shaping the value consequences of corporate cash policies.