In this paper we provide evidence on how firm-specific and macroeconomic uncertainty affects shareholders’ valuation of a firm’s cash holdings. This extends previous work on this issue by highlighting the importance of the source of uncertainty. Our findings indicate that increases in firm-specific risk generally increase the value of cash while increases in macroeconomic risk generally decreas...

This study tries to answer the question, “has macroeconomic instability detrimental impact on gross domestic product of Pakistan over the period of 1980 to 2012?” For reviewing macroeconomic instability a comprehensive macroeconomic instability index is constructed by incorporating inflation rate, unemployment rate, trade deficit and budget deficit. Autoregressive Distributed Lag (ARDL) model h...

Two approaches to the multi-factor modeling of security returns are evaluated. In the first, a variance/covariance matrix of security returns and macroeconomic factors is assembled and decomposed. Factors are generated through this algebraic decomposition and are thus unspecified. In the second, a macroeconomic variable model is proposed and a linear model estimating security returns as a funct...