Financial performance, corporate governance, and political connection for corporate cash holding

This study examines corporate cash holding through the lens of the four motives in Keynesian theory (Schumpeter & Keynes, 1936): 1) transactions, 2) caution, 3) taxes, and 4) agency, (Roy, 2018). It explores the influence of financial performance, corporate governance, and political connections on cash holding, with political connections serving as a mediating factor. The research employs quantitative methods grounded in the philosophy of positivism, focusing on a specific population of 105 companies, with a final sample of 735 observations. The findings suggest that audit committees, current ratios, quick ratios, and political connections play a role in improving cash holding. The study concludes that financial performance, corporate governance, and political connections significantly impact cash holding. While financial performance and governance influence the formation of political connections, political connections do not mediate the relationship between financial performance, corporate governance, and cash holding. This study highlights the importance of liquidity and the interaction between political, debt, and asset connections in achieving corporate objectives. The dynamics of financial performance, corporate governance, and political connections are crucial to public interest.