What is it about?
The study finds that growth opportunities, cash flow, and cash flow volatility affect cash holdings positively, while size, leverage, liquidity, asset intangibility and dividend payments affect negatively. Companies operating in the airlines sub-sector hold more cash, while companies in the hotels and restaurants and bars sub-sectors hold less cash than the reference sub-sector of travel and tourism.
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Why is it important?
The study examines the determinants of company cash holdings in the travel and leisure sector as a whole and its sub-sectors. Considering the unique fundamental characteristics of high leverage, high risk, high capital intensity and high competition in the TL sector, the results show that growth opportunities, cash flow, and cash flow volatility exert a positive impact on the cash holdings of TL companies, while size, leverage, liquidity, asset intangibility and dividend payments exert a negative effect. The companies in the airlines sub-sector hold more cash, while the companies in hotels and restaurants and bars sub-sectors hold less cash than the ones in the travel and tourism sub-sector. After the global financial crisis of 2008, the results suggest that TL companies have recently started to hold more cash in the years 2014, 2015 and 2016.
Perspectives
I hope this article will add more to the financial literature on cash management, especially for travel and leisure sector and its sub-sectors as a whole. Non of the study exist in the financial literature, which has explored determinants of cash holdings in the travel and leisure sector and its sub-sectors as a whole. so this article will not only fill that gap but will also provide an opportunity for researchers to help them in doing future research in a similar fashion for some other countries.
Wisal Ahmad
Abdul Wali Khan University Mardan
Read the Original
This page is a summary of: Cash management in the travel and leisure sector: evidence from the United Kingdom, Applied Economics Letters, June 2018, Taylor & Francis,
DOI: 10.1080/13504851.2018.1488050.
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