Cash gap in improving firm performance and value: A corporate strategy study

This research gauges the influence of the cash gap (CG) on firms’ performance and value for Jordanian industrial firms listed in the Amman Stock Exchange (ASE) during the period (2010–2019). By applying a panel data analysis on a sample of 39 firms, the study used the CG as the main independent variable. However, for dependent variables, the research focused on two measures of companies’ performance, which are operating profit margin (OPM) and return on assets (ROA). By employing Tobin’s Q (TQ) as a proxy for firm value (FV), the research reveals that there is a significant and inverse linkage between CG and both OPM and ROA. These results align with previous studies conducted by Kouaib and Bu Haya (2024) and Ruguru (2023). The results also revealed that reducing the CG and debt ratio, while increasing volume, financial assets ratio, and sales growth, improves company performance. Moreover, based on the Arellano-Bond estimation results, the research notes a significant and inverse nexus between the CG and FV. The results of this research suggest fruitful insights for decision-makers, executive managers, and debt holders, contributing to their financing and investing activities.