Determinants of Cash Holding in Indonesian Industrial Companies

Abstract

This research investigates how net working capital, investment opportunity set, and cash conversion cycle influence cash holding decisions among industrial companies listed on the Indonesia Stock Exchange between 2020-2023. Using a specific sampling method, 36 companies were chosen from a total of 66, resulting in 144 data points that were analyzed with multiple linear regression using SPSS version  Statistical analysis reveals that net working capital and the cash conversion cycle demonstrate significant positive effects on cash holding levels, whereas the investment opportunity set exhibits a positive but statistically insignificant influence. Collectively, these variables account for 29.4% of cash holding variations, with the remaining 70.6% attributable to factors beyond this analytical framework. These findings offer useful information regarding corporate treasury management and liquidity optimization strategies.