Cash Management in the Travel and Leisure Sector: Evidence from the United Kingdom

This thesis investigates the determinants of cash holdings for companies operating in the travel and leisure sector of the United Kingdom (UK) between 2005 and 2016. Following the predictions of three prominent models, namely, the pecking order model, the trade-off model and the free cash flow model, the study tests the hypotheses for several firm-specific determinants of cash holdings. The study finds that size, growth opportunities and cash flow affect cash holdings positively, while leverage, capital expenditures, liquidity, cash flow volatility and dividend payments affect negatively. Consequently, it can be concluded that the pecking-order model receives strong empirical support followed by trade-off model to explain the variation in cash holdings among travel and leisure companies of UK. The free cash flow model receives only weak support. Moreover, at the sub-sector level, companies operating in the airlines sub-sector hold more cash than the reference sub-sector of travel and tourism.