Profitability, Cash Flow, and Capital Expenditure Affect Cash Holding in Manufacturing Firms Listed on Indonesia Stock Exchange
DOI:
https://doi.org/10.30872/miceb.v7i1.15551Keywords:
Profitability, Cash Flow, Capital Expenditure, Cash HoldingAbstract
Addressing empirical inconsistencies in corporate liquidity behavior during the 2019-2024 economic transition, this study investigates cash holding determinants within the consumer cyclicals sector on the Indonesia Stock Exchange (IDX). Utilizing a purposive sample of 109 firms from 164 population with data sourced from the IDX official website. The Fixed Effect Model was implemented via EViews 13 to capture firm specific heterogeneities ensuring robust unbiased estimation amidst systemic shocks. Result demonstrate that profitability and capital expenditure remain strategically decoupled from cash retention, suggesting earnings are prioritized for operational stabilization and external financing. Conversely, cash flow exerts a significant positive influence, strongly validating the Pecking Order Theory. With an R2 of 27.71%, these findings reveal that internal metrics explain core dynamic. Though 72.29% of variance is dictated by unobserved catalysts. Theoretically, this study refines emerging market liquidity frameworks, practically it mandates that managers optimize cash conversion cycle to maintain solvency against market volatility
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