Firm-specific financial determinants of a cash holding strategy in the renewable energy sector

Abstract

This study aims to examine the firm-specific financial determinants of cash holding strategies in renewable energy companies for the period 2011-2022 using econometric analysis methods. By employing a panel regression model, the study investigates the impact of operating profit margin, leverage, growth, earnings, dividend payout, and the COVID-19 pandemic on cash-on-hand. Empirical findings indicate that operating profit margin, debt financing, growth policies, and pre-tax earnings are significant determinants of cash holding strategies in renewable energy companies. The analysis reveals that the effect of dividend policy on cash holdings is insignificant. The findings offer substantial insights into agency cost theory and financial hierarchy theory in cash management and provide evidence that managers of renewable energy companies act in accordance with speculative motive, agency motive, and precautionary motive. © 2025 by Nova Science Publishers, Inc. All rights reserved.