**7. Conclusions**

The research has examined the effect of government ownership on the level of cash holdings in 107 Jordanian listed firms covering the period 2009 to 2018. GMM was employed to investigate the main hypothesis. We provide evidence of the dynamic nature of cash holdings; firms tend to adjust their cash to reach an optimal level. It was found that capital expenditure and cash flow were positively and significantly associated with the level of holdings. With regard to the hypothesis, the results support the explanation of the free cash flow theory regarding the level of cash holdings. Agency costs in Jordanian firms with government ownership are high; managers who are protected by the government tend to hoard high levels of cash to serve political or their own interests.

The research provides implications for investors in Jordan. Prior to making investment decisions in any firm, they are advised to consider its ownership structure, more specifically the level of government ownership. For example, in firms with higher government ownership levels, investors should expect higher cash holdings, which are likely to be used for non-profit maximization objectives. In addition, an implication for corporate managers seeking to maximize the wealth of their principals (other than government) is to find horizons that lead to increasing the value of the firm and to attracting potential new investors who might be needed as a future means of finance.

The research is not without limitations. Due to the small sample size, we were unable to examine the differences in the level of cash holdings between different groups of firms; for example, dividend-paying and non-paying ones, and young and mature firms. In addition, market researchers are particularly advised to consider the ineffectiveness of the various types of ownership as a governance mechanism with regard to the level of cash holdings. Finally, we would recommend that researchers consider agency cost proxies to investigate the impact of agency conflict of corporate cash holdings.

**Author Contributions:** Conceptualization, A.A., S.A.A., M.Z.S. and M.A.K.; methodology, A.A.; software, A.A.; validation, A.A. and S.A.A.; formal analysis, A.A.; investigation, S.A.A.; resources, A.A., M.Z.S. and M.A.K.; data curation, A.A., M.Z.S. and M.A.K.; writing—original draft preparation, A.A., S.A.A., M.Z.S. and M.A.K.; writing—review and editing, A.A., S.A.A., M.Z.S. and M.A.K.; visualization, A.A.; supervision, A.A.; project administration, S.A.A. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **Appendix A**


**Table A1.** Random Effects Logistic Regression Estimates.

#### **Table A1.** *Cont.*


\*\*\*, \*\*, and \* denote significance at levels of 1%, 5%, and 10%, respectively. Increase Capex: a dummy variable equal to 1 if a firm increases capital expenditures in the following year.



\*\*\*, \*\*, and \* denote significance at levels of 1%, 5%, and 10%, respectively. INCREASE DIV: a dummy variable equal to 1 if a firm increases the sum of dividends in the following year.

### **References**

