**Cuong Nguyen Thanh**

Faculty of Accounting and Finance, Nha Trang University, Nha Trang City 650000, Vietnam; Cuongnt@ntu.edu.vn

Received: 27 May 2019; Accepted: 16 June 2019; Published: 20 June 2019

**Abstract:** The purpose of this research is to investigate whether there is an optimal cash holding ratio, in which firm's performance can be maximized. The threshold regression model is applied to test the threshold effect of the cash holding ratio on firm's performance of 306 non-financial companies listed on the Vietnam stock exchange market during the period of 2008–2017. Experimental results showed that a single-threshold effect exists between the ratio of cash holding and company's performance. A proportion of cash holding within a threshold of 9.93% can contribute to improvement of the company's efficiency. The coefficient is positive but tends to decrease when the cash holding ratio passes the 9.93% check point, implying that an increase in cash holdings ratio will continue to diminishment of efficiency eventually. Therefore, the relationship between cash holding ratio and firm's performance is nonlinear. From this result, this paper provides policy implications for non-financial companies listed on the Vietnam stock exchange market in determining the proportion of cash holding flexibly. In detail, non-financial companies listed on the Vietnam stock exchange market should not keep the cash holding ratio over 9.93%. To ensure and enhance the company's performance, the optimal range of cash holding ratios should be below 9.93%.

**Keywords:** cash holding ratio; firm's efficiency; threshold regression model; non-financial companies; Vietnam stock exchange market
