Abstract
This study examines cash holding practices of listed non-financial firms, and further compares the cash holding practices of local and foreign firms in Nigeria, then explores the moderating effect of foreign ownership on this relationship. The study uses data from 60 listed firms over the period 2011-2020 and employs the 2-step System GMM. The key findings show that foreign firms would hold more cash compared to local firms in Nigeria, unless those local firms have improved their profitability. On the other hand, more financial leverage, asset tangibility, and capital expenditures would negatively affect cash holding practices in general, and for both local and foreign firms, more dividends would only encourage foreign firms to hold more cash, while firm growth has no impact on cash holding in either local or foreign firms. It is also evident that foreign ownership would moderate the above relationship, in which firm growth would have a positive impact, while profitability, leverage, asset tangibility, capital expenditures, and dividends would have a negative impact on cash holding practices. Those findings should assist managers of firms in Nigeria to understand the determining factors of cash holding, and to consider the accruing benefit and detriment of holding cash.