| The present study examined the role of financial constraint on cash holding policy on the hotel industry. Using two financial constrained measurements, such as dividend payment and bond rating, this study examined the relation of debt and cash flow on cash holding. Considering the endogenous relation between debt and cash holding, 2SLS regression was used. Unlike the researcher's prediction, debt is negatively related to cash holding regardless of the extent of financial constraints. Also financial constrained firms showed a positive relation between cash flow and cash holding, suggesting that constrained firms are likely to save cash out of cash flow. For unconstrained firms, the relation becomes insignificant, suggesting that firms with better access to capital markets do not have the cash saving motive out of cash flow. |
