Determinants of Corporate Cash Holdings in Hospitality Sector of United States of America: Using Two-Step System GMM

Abstract

This study investigates the determinants of cash holding in the Hospitality sector in the USA for the period of 14 years from 2005-to 2018. The selection of 2005 as a base year was due to Thomson Reuter Data Stream registered with International Classification Benchmark (ICB). Determinants i.e. LVG, CF-V, and LQTY,have a positive impact, while SZE, CP-EXP, GR_OPP, CACF, A-INT, DDD, and SX have a negative impact on cash holding. Furthermore, model 2 shows a sub-sector where Restaurant and bar is taken as a reference year. Airlines companies retain excess for their operating activities while Hotel is found significant but prevail a negative coefficient. So, they may easily access to financial market easily. Unfortunately, other sub-sector, i-e, gambling, recreational activities, and tours and Travels, are found insignificant. The estimated sign prevails that there is no issue of auto correlation. While Ho of Hansen's test indicates that there is no issue of explanatory variable and error terms.