The Role of Cash Holding in Mitigating Refinancing Risk: Evidences from Pakistan
Author: Adeel Khaliq

This study focuses to empirically investigate the role of cash holdings in mitigating refinancing risk. The specific objectives of the study are to investigate the role of cash holdings in mitigating refinancing risk and to examine impact of debt maturity on cash holdings. This study is based on panel data of 101 Pakistani manufacturing firms, which are listed at Pakistan Stock Exchange from the period of 2010-2014. In this study, long term debt and short-term debt are used as the proxy of refinancing risk. In this study the model is based on a simultaneous equations framework similar to the one used by Harford et al. (2014). The results of the study suggested that through short term debt maturity the refinancing risk can be mitigated because there is the positive relation between short term debt maturity and cash holdings. Long term debt maturity shows negative but significant relation between cash holdings and refinancing risk. This study concluded the policy formulation for firms that are facing the choice between short term debt and long term debt in order to mitigate risk arising from refinancing. More cash holdings are important for the firms having short-term debt maturity. Supervisor:- Dr. Hasan M. Mohsin

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Supervisor: Hassan Muhammad Mohsin

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