Determinants of Cash Holding in Basic Materials Companies Listed on the Indonesia Stock Exchange (Goodwood Akuntansi dan Auditing Reviu)

Summary

• Purposive sampling selected 78 basic materials companies listed on the Indonesia Stock Exchange, yielding 390 company-year observations from 2021 to 2025.p.1
• The full sector frame comprised 114 basic materials companies, from which 28 were excluded for lacking complete audited financial statements and 8 due to delisting.p.7
• At PT Indocement Tunggal Prakarsa Tbk, cash and cash equivalents grew by 41.16% in 2024, rising from approximately IDR 3.1 trillion to IDR 4.5 trillion.p.2
• Profitability showed a statistically significant positive regression coefficient of 2.450 with t = 4.342 and p < 0.001.p.12
• Net working capital displayed a positive coefficient of 1.591 with t = 7.896 and p < 0.001, whereas capital expenditure was statistically insignificant with t = -0.530 and p = 0.596.p.12

Key insights

1. The simultaneous regression model confirmed that profitability, net working capital, and capital expenditure jointly affect cash holdings with F = 39.739 and p < 0.001.p.13
2. Profitability exerts a statistically significant positive effect on corporate cash holding among basic materials firms.p.12
3. Net working capital is positively associated with cash holding, reflecting short-term financial capacity and accounting overlap within current assets.p.12
4. Capital expenditure demonstrates no statistically significant relationship with cash holding at the 5% level.p.12
5. Applying the Cochrane-Orcutt procedure raised the Durbin-Watson statistic from 0.760 to 1.949 to reduce serial correlation in regression residuals.p.11
6. Across the original 390 observations, the cash holding ratio averaged 0.104198 with a minimum of 0.0008 and a maximum of 0.9304.p.9