Are South African firms holding more cash than before?

Abstract

This research investigates the levels of cash holdings of South African firms and the progression over the past 25 years. It also reviews factors that may have a relationship to the levels of cash. Such factors have been shown to include the size of the f irm, levels of debt, industry of operation, level of share prices and impact of dividends and research. The research is quantitative and relies on financial metrics of the companies listed on the JSE All share index, with the data coming from the MacFas database, and from Bloomberg. The research aims to find if any of these key factors are present in the South African context, and to open up the debate on whether the factors affect the levels of cash. The research found that the levels of cash in 2013 are higher than they were in 1990 but lower than all the years since 1997. Larger companies and dividend payers hold less cash, and certain industries like mining and media have higher cash to assets. There was no evidence of any link with research and development. There is no single reason found for the levels of cash, which is driven by industry and company specifics.