Topic
Cash
About: Cash is a research topic. Over the lifetime, 11024 publications have been published within this topic receiving 178291 citations.
Papers published on a yearly basis
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Papers
TL;DR: In this paper, the authors empirically estimate the sensitivity of cash using a large sample of manufacturing firms over the 1971 to 2000 period and find robust support for their theory, and hypothesize that constrained firms should have a positive cash flow sensitivity, while unconstrained firms' cash savings should not be systematically related to cash flows.
Abstract: We model a firm’s demand for liquidity to develop a new test of the effect of financial constraints on corporate policies. The effect of financial constraints is captured by the firm’s propensity to save cash out of cash flows (the cash flow sensitivity of cash). We hypothesize that constrained firms should have a positive cash flow sensitivity of cash, while unconstrained firms’ cash savings should not be systematically related to cash flows. We empirically estimate the cash flow sensitivity of cash using a large sample of manufacturing firms over the 1971 to 2000 period and find robust support for our theory. TWO IMPORTANT AREAS OF RESEARCH in corporate finance are the effects of financial constraints on firm behavior and the manner in which firms perform financial management. These two issues, although often studied separately, are fundamentally linked. As originally proposed by Keynes (1936), a major advantage of a liquid balance sheet is that it allows firms to undertake valuable projects when they arise. However, Keynes also argued that the importance of balance sheet liquidity is influenced by the extent to which firms have access to external capital markets (p. 196). If a firm has unrestricted access to external capital— that is, if a firm is financially unconstrained—there is no need to safeguard against future investment needs and corporate liquidity becomes irrelevant. In contrast, when the firm faces financing frictions, liquidity management may become a key issue for corporate policy. Despite the link between financial constraints and corporate liquidity demand, the literature that examines the effects of financial constraints on firm behavior has traditionally focused on corporate investment demand. 1 In an influential paper, Fazzari, Hubbard, and Petersen (1988) propose that when firms face financing constraints, investment spending will vary with the availability of internal funds, rather than just with the availability of positive net present
2,874 citations
TL;DR: In this article, the authors identify the effect of social capital on financial development by exploiting social capital differences within Italy and find that households are more likely to use checks, invest less in cash and more in stock, have higher access to institutional credit, and make less use of informal credit.
Abstract: To identify the effect of social capital on financial development, we exploit social capital differences within Italy. In high-social-capital areas, households are more likely to use checks, invest less in cash and more in stock, have higher access to institutional credit, and make less use of informal credit. The effect of social capital is stronger where legal enforcement is weaker and among less educated people. These results are not driven by omitted environmental variables, since we show that the behavior of movers is still affected by the level of social capital of the province where they were born.
2,756 citations
TL;DR: In this article, a simple model and reality is presented for the analysis of the simple model with respect to the real world, and the consequences of the analysis are discussed. But the analysis is limited.
Abstract: Introduction, 545. — I. A simple model, 545. — II. Some consequences of the analysis, 549. — III. The simple model and reality, 552.
2,607 citations
TL;DR: The authors investigated how the cash holdings of U.S. firms have evolved since 1980 and whether this evolution can be explained by changes in known determinants of cash holdings and found no consistent evidence that agency conflicts contribute to the increase.
Abstract: The average cash-to-assets ratio for U.S. industrial firms more than doubles from 1980 to 2006. A measure of the economic importance of this increase is that at the end of the sample period, the average firm can retire all debt obligations with its cash holdings. Cash ratios increase because firms’ cash flows become riskier. In addition, firms change: They hold fewer inventories and receivables and are increasingly R&D intensive. While the precautionary motive for cash holdings plays an important role in explaining the increase in cash ratios, we find no consistent evidence that agency conflicts contribute to the increase. CONSIDERABLE MEDIA ATTENTION has been devoted to the increase in cash holdings of U.S. firms. For instance, a recent article in The Wall Street Journal states that “The piles of cash and stockpile of repurchased shares at [big U.S. companies] have hit record levels.” 1 In this paper, we investigate how the cash holdings of U.S. firms have evolved since 1980 and whether this evolution can be explained by changes in known determinants of cash holdings. We document a secular increase in the cash holdings of the typical firm from 1980 to 2006. In a regression of the average cash-to-assets ratio on a constant and time, time has a significantly positive coefficient, implying that the average cash-to-assets ratio (the cash ratio) has increased by 0.46% per year. Another way to see this evolution is that the average cash ratio more than doubles over our sample period, from 10.5% in 1980 to 23.2% in 2006. Everything else equal, following Jensen (1986), we would expect firms with agency problems to accumulate cash if they do not have good investment opportunities and their management does not want to return cash to shareholders. In the absence of agency problems, improvements in information and financial
2,451 citations
TL;DR: In this article, the authors investigate how corporate governance impacts firm value by comparing the value and use of cash holdings in poorly and well-governed firms, and they show that governance has a substantial impact on value through its impact on cash: $1.42 to $0.88.
1,959 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2026 | 5 |
| 2025 | 642 |
| 2024 | 1,017 |
| 2023 | 1,481 |
| 2022 | 2,165 |
| 2021 | 657 |