International Journal of Innovation and Applied Studies
ISSN: 2028-9324     CODEN: IJIABO     OCLC Number: 828807274     ZDB-ID: 2703985-7
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Cash Holdings and Corporate Profitability: Some Evidences form Jordan

Volume 8, Issue 3, September 2014, Pages 898–907

 Cash Holdings and Corporate Profitability: Some Evidences form Jordan

Sami N. M. Abushammala1 and Jamalludin Sulaiman2

1 Lecturer University College of Applied Sciences (UCAS), P.O. Box: 1415, Gaza, Palestine
2 Professor, School of Social Sciences, Universiti Sains Malaysia (USM), 11800 Pulau Pinang, Malaysia

Original language: English

Copyright © 2014 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


The purpose of this paper is to examine the effect of cash holdings level on firms' profitability. Three simple regression models were used to examine the relationships between cash holdings and firms' profitability using a panel data of 65 non-financial firms listed in Amman Stock Exchange (ASE) during the period from 2000 to 2011. The results showed a positive significant relationship between cash holdings and profitability. This means that a good financial performance of the firm is an outcome of vast corporate cash holdings. This positive relationship reflected the beliefs of Jordanian firms' managers that the absence of effective liquidity management will cause cash shortages and will result in difficulties in paying obligations, which negatively affected the firm's profitability. This study contributes to the practical world. It helps firms in the markets of emerging countries in general and in ASE in particular, manages their liquidity and cash. Furthermore, the study helps firms hold the percentage of cash, which lead to efficient financial performance. This study encourages the future researches to find out the suitable strategies related to cash holdings.

Author Keywords: Cash Holdings, Profitability, Return on Assets (ROA), Return on Equity (ROE), Earnings per share (EPS), Amman Stock Exchange (ASE).

How to Cite this Article

Sami N. M. Abushammala and Jamalludin Sulaiman, “Cash Holdings and Corporate Profitability: Some Evidences form Jordan,” International Journal of Innovation and Applied Studies, vol. 8, no. 3, pp. 898–907, September 2014.