Article: Institutional quality and cash holdings: empirical evidence from an emerging market Journal: International Journal of Business Innovation and Research (IJBIR) 2026 Vol.40 No.12 pp.1 - 38 Abstract: This study examines the impact of institutional quality on cash holdings among firms listed on the Vietnamese stock market. Using panel data from 2011-2024 and a fixed effects model (FEM), the findings reveal a negative relationship between institutional quality and cash holdings. The analysis further identifies significant moderating mechanisms in this relationship. Specifically, profitability and dividend payment strengthen the negative effect of institutional quality on cash holdings. In contrast, financial leverage, managerial ownership and executive duality weaken this disciplinary effect, rendering corporate cash policies less responsive to improvements in institutional quality. These findings are consistent with the agency theory and the pecking order theory. Inderscience Publishers - linking academia, business and industry through research

Title: Institutional quality and cash holdings: empirical evidence from an emerging market

Authors: Phan Tran Minh Hung; Vo Ngoc Tuong Vi; Vo Hoang Diem Trinh; Vo Hong Tam; Thi Kim Nguyen

Addresses: Hong Bang International University, 215 Dien Bien Phu Street, Gia Dinh Ward, Ho Chi Minh City, Vietnam ' First Class Logistics Company Limited, 8 Cao Thang Street, Ban Co Ward, Ho Chi Minh City, Vietnam, Ho Chi Minh City, Vietnam ' University of Economics, The University of Danang, 71 Ngu Hanh Son Street, Da Nang City, Vietnam ' University of Economics, The University of Danang, 71 Ngu Hanh Son Street, Da Nang City, Vietnam ' Excelsia University College, 1 Cityview Road, Pennant Hills, NSW 2120, Australia

Abstract: This study examines the impact of institutional quality on cash holdings among firms listed on the Vietnamese stock market. Using panel data from 2011-2024 and a fixed effects model (FEM), the findings reveal a negative relationship between institutional quality and cash holdings. The analysis further identifies significant moderating mechanisms in this relationship. Specifically, profitability and dividend payment strengthen the negative effect of institutional quality on cash holdings. In contrast, financial leverage, managerial ownership and executive duality weaken this disciplinary effect, rendering corporate cash policies less responsive to improvements in institutional quality. These findings are consistent with the agency theory and the pecking order theory.

Keywords: institutional quality; cash holdings; moderating mechanisms; Vietnam; emerging market; Provincial Competitiveness Index; PCI; corporate governance; agency theory; pecking order theory; fixed effects model; FEM; system generalised method of moments; System-GMM; panel data; precautionary cash motive.

DOI: 10.1504/IJBIR.2026.155816

International Journal of Business Innovation and Research, 2026 Vol.40 No.12, pp.1 - 38

Received: 28 Mar 2026
Accepted: 14 Jun 2026
Published online: 14 Aug 2026 *

Title: Institutional quality and cash holdings: empirical evidence from an emerging market

Keep up-to-date