Sectoral Differences in The Impact of Cash Holdings on Bankruptcy Risk: Evidence From Uzbekistan

Abstract Research aim: This study aims to investigate the impact of corporate cash holdings on bankruptcy risk, with particular emphasis on sectoral differences in Uzbekistan. Design/ Methodology/ Approach: This study uses a robust panel dataset of 299 listed firms in Uzbekistan over the period 2014-2021 (2,301 firm-year observations). Panel regression techniques are employed to examine the relationship between cash holdings and bankruptcy risk across various industry sectors. Research finding: The findings reveal that corporate cash holdings significantly reduce bankruptcy risk, especially in the manufacturing-related industries. The sectoral analysis highlights disparities in financial resilience and risk exposure, indicating the importance of industry-specific financial strategies. Theoretical contribution/Originality: This study provides evidence from an underresearched transitional economy, thereby enhancing our understanding of firm-level financial behaviour in emerging markets. The findings support the relevance of trade-off theory in Uzbekistan, while suggesting that free cash flow theory may require contextual adaptation. Practitioner/Policy implication: The results underscore the need for policymakers and practitioners to adopt differentiated approaches when designing financial regulations and firm strategies. Particularly, strengthening liquidity management in the manufacturing sector can enhance corporate resilience. Research limitation: The study is limited by its focus on a single country, potential data constraints, and the exclusion of certain variables. These limitations open avenues for future research to explore cross-country comparisons and incorporate broader macroeconomic indicators.