We propose a theory of credit lines provided by banks to firms as a form of monitored liquidity insurance. Bank monitoring and resulting revocations help control illiquidityseeking behavior of firms insured by credit lines. The cost of credit lines is thus greater for firms with high liquidity risk, which in turn are likely to use cash instead of credit lines. We test this implication for corpo...

We examine the relations between national cultures, the multinationality of the firm and its holdings of cash. We develop several hypotheses from well known corporate finance theories and theories of the multinational firm, positing that cultural factors as well as the degree of multinationality of firms influence their decisions to hold cash. In particular, firms in countries with high uncerta...

This study examines the relationship between government deficit and corporate liquidity (cash holdings). Using data of nonfinancial firms in Taiwan from 1981 to 2009, this study finds that corporate liquidity is lower when government deficit is higher. In addition, corporate liquidity is related with other macroeconomic conditions, such as inflation, short-term interest rate, and economic growt...

This study aims to investigate the impact of deviation from optimal level of cash holdings on adverse selection and moral hazard problems. The data set includes 106 listed firms of Tehran Stock Exchange during the period of 2005-2016 and both panel data and cross-sectional data multivariate regressions were utilized in different stage of analysis to test the hypotheses. According to the optimal...

Using data from 41 countries, we provide novel empirical evidence that firms’ cash holdings are positively associated with their climate change exposure. This is robust to different model specifications and survives a battery of tests ease concerns related spurious correlation omitted variable bias. the release Stern Review as an exogenous shock awareness, show this association becomes signific...