The Effect of Cash Holding of Non-Financial Companies on the Company Performance Recovery after the Covid-19 Pandemic
Corporate cash holding is critical during challenging times like the Financial Crisis. When a crisis strikes, firms may exhaust their cash reserves to pay for their liabilities while their revenue or cash flow declines. This study aims to analyze the impact of firms' cash holdings on their recovery after the financial turbulence caused by the Covid-19 pandemic and to evaluate whether it enables the company to recover more quickly than those with lower cash holdings. We hypothesize that the degree of firms' cash holding determines their ability to get through the Crisis and recover their performance quickly after the Crisis. The scope of this research is non-financial companies listed on the IDX through published financial reports. Despite the relatively slow recovery speed after the recession caused by the Covid-19 pandemic, we found that corporate cash holding contributes positively to company operating performance measured by EBITDA. We recommend that companies formulate their cash- holding policies and strategies to mitigate crises in the future better.