Abstract This study examines German firms’ managerial decision-making from the perspective of corporate cash holdings. An econometric analysis 89,018 firm-year observations for 2004–2016 shows that East firms hold significantly more than their West counterparts. It is further demonstrated no reasonable hypotheses (i.e. structural differences, access to financing, and historical differences) can...

We develop a dynamic model of firm in which cash management is partially delegated to self-interested manager. Shareholders trade off the cost dismissing manager with managerial discretion over use liquid funds. An improvement corporate governance quality may have positive or negative effect on levels and values balances, depending source improvement. While reduction entrenchment results lower ...

C urrently U.S. corporations have record-high cash holdings. Many argue that this phenomenon is related to the sluggish recovery of the economy: Firms holding more cash are investing less, and this prevents the economy from taking off. While referring to the cash holdings of Apple, the president of a business association stated “Why wasn’t Apple spending that money on expansion, new products an...

We investigate the effect of economic policy uncertainty (EPU) on corporate cash holdings using a large sample international firms. EPU intensifies concerns investors managerial self-dealing and political extraction. Consequently, potential cost (i.e., expropriation) outweighs its benefit precautionary motives), optimal amount decreases. find supportive evidence that firms hold less when is hig...