Sustainable financial strategies: the role of intellectual capital in shaping corporate cash holdings

Purpose This study aims to investigate the relationship between IC and its components including human and structural capital efficiency (HCE and SCE), capital employed efficiency (CEE) and cash holdings. Design/methodology/approach The analysis was conducted using a sample of A-type listed share companies in China over the period 2010–2022. The study employs both fixed effect and system GMM models to analyze panel data, controlling for firm-specific heterogeneity and endogeneity concerns. Findings The findings reveal that all components of intellectual capital including HCE, SCE and CEE have a significant reducing impact on cash holdings. Higher levels of human and structural capital efficiency are associated with lower cash reserves, indicating that firms with more efficient IC utilization require less liquidity for operational needs. Practical implications The study offers valuable implications for policymakers, regulators and corporate stakeholders in enhancing financial performance, operational efficiency and strategic decision-making. By integrating IC considerations into cash management strategies, firms can enhance financial resilience, innovation capabilities and long-term competitiveness, thereby creating value for shareholders and stakeholders alike. Originality/value This research enriches the current literature by offering empirical insights into how IC relates to cash holdings specifically within the Chinese business landscape.