The Moderator Effect of Institutional Ownership on the Relationship between Cash Holdings of Life-Cycle Stages: Evidence from Borsa Istanbul

This paper investigates how moving forward in a life-cycle stage affects a company's cash holdings. Additionally, this research examines how institutional ownership affects a company's cash holdings. We further test whether this ownership moderates the relationship between cash holdings and life-cycle stages or not. The empirical analysis is based on a sample of 1,305 observations in an unbalanced panel data set from 227 Turkish non-financial companies between 2015 and 2020. According to our analysis, moving forward through life-cycle stages has an increasing effect on cash holdings, and increased institutional ownership positively affects cash-holding behavior. Our robustness test also showed that increased foreign ownership increases the cash holdings as the companies move forward in their life cycle stages. On the other hand, local institutional ownership decreases cash holdings behavior. This paper implies that companies reaching their decline stage will hold more cash. The investors of these companies may expect fewer investments, thus growth opportunities from these firms because instead of utilizing these funds, the management will prefer to keep these funds unused.