The work presented in this thesis is, to the best of my knowledge and belief, original, except as acknowledged in the text. The material has not been submitted, either in whole or in part, for a degree at this or any other university. I Acknowledgements I would like to express my deepest gratitude towards Dr. Kelvin Tan, whose insightful guidance, generous help and encouragement have helped me ...

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 fina...

The introduction of credit default swaps (CDS) trading on an underlying firm may influence its future access to external financing and, hence, its precautionary demand for cash. In this paper, we empirically estimate this effect of CDS trading, using a comprehensive sample of North American corporate CDS introductions between 1997 and 2009. We show that corporate cash holdings, as a proportion ...

The gradual replacement of traditional U.S. public companies by more R&D-intensive firms is key to understanding the secular trend in average cash-holdings. Over the last 35 years, an increasing share of R&D—intensive firms has entered the stock market with progressively higher cash-balances. This positive entry-effect dominates the negative within-firm effect post IPO. We build a firm industry...

This study examines the effect of technology spillovers on firms’ cash holdings. It finds that firms facing greater technology spillovers hold higher cash balances. This effect is more pronounced among financially constrained firms and for firms that are likely to benefit more from diffused technology, e.g., those have newer patents, are more profitable, face better growth opportunities and are...

Abstract Since the early 1980s, composition of US public firms has progressively shifted toward less profitable with high growth potential (Fama and French, 2004). We estimate a dynamic corporate finance model to quantify role this selection mechanism for secular trend in cash holdings among firms. find that an increase precautionary savings motive—primarily driven by decline initial profitabil...