Corporate Cash Holdings and Credit Line Usage
نویسندگان
چکیده
We investigate the economic factors driving the unprecedented rise of corporate liquidities since the 1970s. We document that US firms face higher earnings volatility and manage this increased risk with more liquidities in terms of both cash savings and credit lines. The rise in liquidities is not attributable to the increased sales volatility. The higher earnings volatility along with the financial innovation of sweep accounts explain the overall rise of cash holdings amidst widespread credit line usage.
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