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Academics, politicians, and journalists are often highly critical of U.S. firms for holding too much cash. Cash holdings are stockpiled free-cash flow and incur substantial opportunity costs from the perspectives of economics. However, behavioral theory highlights the benefits of cash holdings as fungible slack resources facilitating adaptive advantages. We use the countervailing forces embodie...

We propose a scenario based optimization framework for solving the cash flow matching problem where the time horizon of the liabilities is longer than the maturities of available bonds and the interest rates are uncertain. Standard interest rate models can be used for scenarios generation within this framework. The optimal portfolio is found by minimizing the cost at a specific level of shortfa...

This article describes an intelligent system for financial planning and cashflow optimization named ICF: Intelligent Cash Flow. ICF is a computational tool for decision support which provides short-term and long-term financial managing strategies, considering financial products of the market. The ICF system makes use of Genetic Algorithms to elaborate cash flow projections which improve the com...

Pooled time-series, cross-sectional data on 110 Australian companies over the period 1992-1998 is employed to examine whether the trademarked variant of residual income known as economic value-added (EVA) is more highly associated with stock returns than more conventional accounting-based measures. These other measures of internal and external performance include earnings, net cash flow and res...

This paper studies the exposure of the stock prices of Australian gold-mining firms to changes in gold prices and the valuation effects of gold price exposure. Goldmining firms have significant gold price exposure; the price of the average goldmining stock moves 0.76% for each 1.00% change in Australian-dollar-denominated gold prices. Evidence from the behaviour of stock price sensitivities sug...

Debt introduces firm vulnerability to insolvency as cash flow must be available to make interest payments. This paper reviews the empirical evidence on a sample of more than 6,000 real sector firms in 41 countries and their ability to service debt, as measured by the ratio of cash flow to interest expense, for the period 1994-01. Firmspecific, sector-specific and macroeconomic factors all influ...

The author empirically tests two aspects of the interaction between financial variables and inventory investment: negative cash flow and finance constraints due to asymmetric information. This is one of the first studies of inventory investment and finance constraints using Canadian data. A sample of Canadian manufacturing firms over the period 1992Q2–1999Q4 is split into subsamples based on ag...

We investigate how private information and monitoring affects both the sensitivity of investment to internally generated cash flows and the role of accounting quality in reducing this sensitivity. We expect financing frictions to be lower when debt is obtained from banks with private information and when banks place direct restrictions on investments. We also argue that access to private inform...

Using pooled time-series, cross-sectional data on 110 Australian companies over the period 1992-1998 an examination is undertaken whether the trademarked variant of residual income known as economic value-added (or EVA) is more highly associated with stock returns than conventional accounting-based measures. The accountingbased measures of internal and external performance include earnings, net...