The value of cash holding through the different dynamics of cycles: evidence from Thailand

This research investigates the significance of cash holdings for firm value, represented by excess stock returns, across different levels of growth opportunity cyclicality. The study contributes to existing knowledge in two keyways. First, this research investigates how firms with different growth opportunity volatility can leverage cash holdings to maximize value across economic cycles using data from Stock Exchange of Thailand (SET). It explores this through the relationship between cash, cyclicality, and excess returns. Second, a sector-specific analysis explores how growth opportunity cyclicality differs across industries. This knowledge empowers investors to tailor investment strategies based on sector dynamics and economic conditions. This study confirms prior findings that cash benefits firms with less cyclical growth opportunities, particularly during downturns. However, the effect is weaker in emerging markets like Thailand compared to developed economies.