The average cash holdings of Chinese-listed firms decreased significantly after the split share structure reform in China, which specified a process that allowed previously nontradable shares held by controlling shareholders to be freely tradable on the exchanges. The reduction in cash holdings is greater for firms with weaker governance and firms facing more financial constraints prior to the ...

This study investigates empirically the value investors place in excess cash holdingand how managerial ability impact on the value of cash holding for Iranianfirms from 2006 to 2014. In this research, managerial ability calculated by usingthe data envelopment analysis (DEA). Following the approach of Faulkender andWang, we find that the relation between managerial ability and value of cash hold...

This paper investigates the characteristics of firms that adopt persistent conservative financial policies. We are mainly interested in the determinants of the likelihood of firms adopting the persistent policies of low-leverage and high-cash holdings simultaneously. In this paper, we classify firms as financially conservative if they adopt both low-leverage and high-cash policies at the same t...

U.S. multinational corporations (MNCs) hold significant amounts of cash abroad. Using a handcollected sample of large U.S. MNCs, we find that the percentage of cash trapped overseas has a significantly negative impact on the market value of a firm’s cash holdings. Such negative effect is more pronounced when firms are subject to higher repatriation tax rate, when firms have higher costs of rais...

I quantify a new motive of holding cash through the channel of financing risk. I show that if the access to future credit is risky, firms may issue long-term debt now and save funds in cash to secure the current credit capacity for the future. I structurally estimate the model and find that this motive explains about 30% of cash holdings in the data. Counterfactual experiments indicate that the...

Using the quarterly Compustat files, we present empirical findings that business capital investment is significantly higher in the fourth quarter than in other quarters. Even after controlling for business capital investment determinants, we find that the fourth quarter capital investment is significantly larger but less sensitive to investment opportunities than other quarters’ capital investm...

Payouts play an important role in the relationship between shareholders and agents in terms of rewarding the decisions of shareholders. Previous studies have observed that payout decisions appear in different ways depending on an industry's financial and operating structures. Since the airline industry has been characterized as high debt dependency, this study presumes distinctive characteristi...