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Cash holding decision‐making is one of the main corporate challenges for family firms (FFs), with significant consequences for their growth and survival. It is closely connected to key financial decisions such as financing, investments, and dividends. The motivations behind adjusting cash holdings vary, encompassing precautionary, risk avoidance, opportunity cost considerations, and the spending hypothesis. In our study, we aim to integrate specific motivations for cash holding decisions that stem from the influence of family dynamics within these businesses since FFs have unique characteristics, which affect their financial choices. Therefore, we analyze the impact of family involvement in management and the generational stage of FFs on their level of cash holdings. The results of the partial least squares–structural equation modeling, which was estimated on a sample of 7269 unlisted Spanish FFs, show that the higher the level of family involvement in management, as well as the higher the generational stage, the higher the level of cash holdings, with this having a positive effect on the firm's performance. In addition, we find that the positive relationship between family involvement in management and the level of cash holdings is strengthened by family ownership and weakened by family governance. These findings are relevant for a better understanding of the complexity of cash holding decision‐making in FFs and have practical implications not only for the FFs themselves but also for the entities related to them due to the important links between a firm's liquidity and its risk of default and performance. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to investigate the roles of intellectual capital efficiency and institutional ownership on cash holdings and their speed of adjustment. Design/methodology/approach: Using a sample of 432 firm-year observations of tourism-listed companies, three measures of cash holdings are used as dependent variables and intellectual capital efficiency and institutional ownership as independent variables. The financial data is collected from the S&P Capital IQ database for the period 2015–2020. Two system-generalized methods of moment estimation are used for the robustness checks of the results. Findings: The study provides evidence that an increase in intellectual capital efficiency in tourism firms results in lower cash holdings. The research findings also report that characteristics such as firm size, age and market-to-book value ratio are associated with cash holdings. Furthermore, institutional ownership in these firms did not affect the cash holdings. The results also confirm the existence of a target cash holding level to which the tourism firms attempt to converge. These results are robust to the alternative proxy of cash holding and endogeneity tests. Research limitations/implications: The study uses intellectual capital efficiency measured by the model proposed by Pulic. Alternative measures of intellectual capital can be included in future studies. Future research can also investigate the impact on cash holdings before and during the pandemic for tourism companies. The study is limited to the impact of institutional ownership; thus, research can be extended to consider other types of ownership. Practical implications: The findings of this study indicate that tourism companies should take into account the impact of intellectual capital efficiency on their cash holding decisions. The industry uses a specific financial management strategy in light of better efficiency and possibly values the opportunity cost of holding more cash. Additionally, regulators should re-examine the role of institutional ownership in tourism firms, as it was found to have no impact on cash holdings. The regulators may need to consider other factors, such as firm size and age, when developing policies and regulations to ensure that tourism firms have adequate cash holdings. Originality/value: This study adds to the body of knowledge on the factors that influence cash management and ideal cash levels for the tourism industry. The examination of the effect of intellectual capital on cash holdings is a novel contribution, filling a gap in the existing literature. The findings on the speed of adjustment towards optimal cash holdings also provide support for the trade-off theory. [ABSTRACT FROM AUTHOR]

The objective of this paper is to validate the existence of an extensively documented secular upward trend in corporate cash holding. To do this, we use the new data for Poland and review original datasets from Bates et al. [2009] for the U.S. We find no trace of a trend for Poland and believe most trends for the U.S. come from the cash piling toward the end of the sample period. At best, the U.S. trend applies merely to small firms. We believe cash holding is a period-dependent time-varying variable which also depends on external shocks (e.g., the pandemic or tax regulations). We show that simple addition of macro data (GDP in our case) vastly improves models focused only on optimal cash holding and firm-specific characteristics. We call for a new three-stage approach to study corporate cash, in which micro considerations are complemented by macro data and external liquidity shock analysis. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to examine the impact of board attributes and managerial ownership on cash holdings. Design/methodology/approach: The present study examines a sample of 70 listed firms in Saudi Arabia observed during the period stretching from 2006 to 2016. To test the hypotheses, the authors used generalized method of moments and quantile regressions. Findings: The empirical results reveal that corporate governance (CG) mechanisms are inefficient in the Saudi context. In fact, the authors found that board size, board independence, duality and managerial ownership impact positively and significantly cash holdings. Additionally, quantile regressions confirm the results that at certain thresholds, CG mechanisms are not efficient in protecting shareholders' interests. Shariah compliance is found to moderate negatively and significantly the studied relationship. Originality/value: This study helps to not only clarify and help decision-makers to see the importance of corporate cash management but also to identify the limits of the CG mechanisms put in place. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to provide a comprehensive investigation into the different roles of cash holding decisions on Shariah-compliant and non-Shariah-compliant firms' performance. Therefore, the objective of this study is to analyze the significant relationship of liquidity on Shariah- and non-Shariah-compliant corporations. Design/methodology/approach: This study sample includes non-financial firms listed in six Gulf Cooperation Council (GCC) markets between 2005 and 2019. The study uses panel fixed effects and the dynamic generalized method of moments (system-GMM) models to test the relationship between cash holding and firm performance. The firms' performance is measured using four widely used proxies representing book and market measures of performance including return on assets, return on equity, earnings before interest and tax to total assets and Tobin's Q. Findings: The results explore that the nature of the relationship between cash holdings and performance varies across Shariah-compliant and non-Shariah-compliant firms. Specifically, cash holdings are positively and significantly related to Shariah-compliant firms' performance. However, cash reserves are not significantly related to conventional firms' performance. These findings indicate that Shariah-compliant firms rely more on their cash holdings to avoid costly and less available external financing, meet everyday business needs and invest in profitable projects. In contrast, the value for cash holding is less important for non-Shariah-compliant firms, as their external financing options are less restricted compared to Shariah-compliant firms. Research limitations/implications: This study is not free from limitations. More specifically, the sample of this study comprises of firms listed in GCC countries, which share common features. It would be interesting for future research to examine the linkage between cash holdings and Shariah-compliant and conventional firms' performance by applying a larger sample, such as firms located in countries of the Organization of Islamic Cooperation. Practical implications: The findings of this paper provide useful insights for managers and investors on the important role of cash management for Shariah-compliant firms. Policymakers and bankers need to develop Shariah-based financial products to ease Islamic financing sources. Moreover, the findings of this paper call for more research on the importance of liquidity management for Shariah-compliant firms. Originality/value: This study extends the Islamic finance literature by exploring the key role of cash holdings to Shariah-compliant firms. To the best of the authors' knowledge, this study is the first study to investigate cash holdings and performance between Shariah-compliant and non-Shariah-compliant firms. [ABSTRACT FROM AUTHOR]

Purpose: The paper explores the effect of cash holdings on bank profitability in the context of uncertainty. Design/methodology/approach: Through data on Vietnamese banks from 2007 to 2019, the author measures uncertainty in banking using the dispersion of bank-level shocks and perform dynamic regressions using the generalized method of moments (GMM) and the least squares dummy variable correction. The author uses different measures to comprehensively evaluate bank profitability, including the net interest margins (NIMs), the returns on assets (ROA) and the returns on equity (ROE) Findings: The author documents that more cash holdings reduce bank profits when the uncertainty level is low; however, there is a high uncertainty point at which holding further cash improves bank profitability. Thus, the findings reveal the importance of cash management for banks in times of high uncertainty. Originality/value: This paper is the first to shed light on the impact of cash management on bank profitability while paying close attention to the moderating role of uncertainty. Accordingly, the author indicates the marginal effects of cash holdings on bank profits according to uncertainty levels via drawing plots from interaction terms between continuous variables. This approach exploits all the information exhibited in the interactive variables and hence considerably deepens the understanding of our estimates. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to understand how the business environment of a country has an impact on cash management policies of the firms and also to investigate if there is any asymmetry in cash adjustment dynamics when a firm deviates from its long-term target of cash holdings. Design/methodology/approach: Using a sample of seven emerging Asian countries in the period 2001–2019, the authors investigate the role of country specific variables in the corporate cash holdings and their cash adjustment mechanism. They use the panel data regression method to estimate the results. Findings: The authors find that the overall financial development of a country has a significant impact on corporate cash holdings and cash adjustment dynamics. When a firm has excess cash, the speed of adjustment towards the target is faster as compared to when it has deficit cash holdings. Further, when a firm holds excess cash, it adjusts towards the target using cash from investments; in case of deficit cash holdings, the adjustment happens via cash from financing activities. Practical implications: The results of the study are helpful to corporate managers as these are important references to them to understand and design cash management policies by considering factors that are measured at the country level. It also provides them a clearer understanding about the role of corporate board and information asymmetry in cash holdings. Originality/value: This is the first study which examines the role of country-specific variables on corporate cash holdings and their adjustment mechanism of firms in emerging Asia. Further, the study extends the literature by providing new evidence that there is asymmetry in cash adjustment dynamics of firms after controlling for the overall financial development of a country. [ABSTRACT FROM AUTHOR]

Introduction/Main Objectives: This research aims to examine the effects of cash holdings on a firm’s R&D intensity. We further examine how that relationship may be varied across different controlling shareholders. For robustness reasons, we test it in a developing market and a developed market. Background Problems: Economics and business theories state that research and development (R&D) is susceptible to financing constraints due to the lack of collateral value and asymmetric information issues. This argument has been extensively debated with no consensus being reached. Therefore current study focuses on the examination of R&D and cash holding and the role of controlling shareholders. Novelty: The current study considers the importance of controlling shareholders on the relationship between cash holding and R&D intensity. We expect that different controlling shareholders will have different constraints on R&D financing. Research Methods: This study focuses on a sample of public listed companies in Malaysia and Singapore from the year 2012 to 2018, and estimates the model under a two-step GMM panel regression to eliminate the endogeneity issue. Finding/Results: The results show that cash holdings have significant effects on the intensity of R&D. However, that relationship is different across countries and across controlling shareholders. Malaysia’s foreign firms will increase their R&D’s intensity when their cash holdings are high. Meanwhile, Singaporean family firms will reduce the intensity of their R&D when their cash holdings are high. Overall the findings confirm the hypothetical alignment of the agency theory and also the resource-based view theory. Conclusion: Our findings surmise that higher cash holdings cause a lower R&D intensity due to the cash management decisions by managers. A firm with high leverage tends to reduce its R&D intensity when cash holdings are high, and vice versa. This behavior can be found in all the controlling shareholders [ABSTRACT FROM AUTHOR]

We evaluate the link between chief executive officer (CEO) industry tournament incentives (ITIs) and the product-market benefits of corporate liquidity. We find that ITIs increase the level and marginal value of cash holdings. Furthermore, ITIs strengthen the relation between excess cash and market-share gains, especially for firms that face significant competitive threats. Additionally, for firms with excess cash, higher ITIs lead to increased research and development (R&D) expenses, capital expenditures, and spending on focused acquisitions as well as reduced payouts. Overall, our findings suggest that ITIs increase the value of cash by incentivizing CEOs to deploy cash strategically to capture its product-market benefits. [ABSTRACT FROM AUTHOR]

We study time-series and cross-firm variation in corporate cash holdings from 1920 to 2014. The recent increase in cash is not unique in magnitude. However, the recent divergence between average and aggregate cash is new and entirely driven by a shift in cash policies of newly public firms, whereas within-firm changes have been negative or flat since the 1940s. Cross-sectional relations between cash holdings and firm characteristics are stable throughout the century, though characteristics explain little of the trends in aggregate cash. Macroeconomic conditions, corporate profitability and investment, and (since 2000) repatriation taxes explain aggregate cash over the last century. Received August 23, 2017; editorial decision April 28, 2018 by Editor Andrew Karolyi. [ABSTRACT FROM AUTHOR]

This paper explores the connection between rising intangible capital and the secular upward trend in U.S. corporate cash holdings. We calibrate a dynamic model with two productive assets—tangible and intangible capital—in which only tangible capital can serve as collateral. We highlight the following points: (i) a shift toward intangible capital shrinks firms' debt capacity and leads them to hold more cash, (ii) the effect accounts for three‐quarters of the observed trend in average cash ratios, and (iii) it also accounts for the upward trend of cash ratios in the cross‐section of small and large firms and in the aggregate. [ABSTRACT FROM AUTHOR]

There are two schools of thought regarding cash policy, where one sect finds cash policy is insignificant in today's perfect capital market condition and the other feel corporate cash policy is the key determinant of company growth and success. Corporates constantly balance in maintaining cash reserves to cushion against future contingencies. Shortage of liquid assets may affect the operation of the firm. Cash management of any firm is bounded by precautionary, transaction, and speculative motives. Various predominant factors influence a company's cash reserve policy. The natures of business and R&D expenditure are a few key determinants that demand a firm to maintain a certain level of cash. At the same time maintaining an optimum cash balance is becoming hypothetical under the current scenario. The Company must take an optimum cash policy so that it should not remain ideal without generating any return. This paper is to analyze the impact of cash policy and cash holding patterns of Indian firms. The paper has tried to uncover certain determinants of cash holding. The study highlights the relationship between variables such as cash ratio, leverage, and size of the firm. Panel data regression and the Random Effect model are used. The sample for the study is non-financial companies with ten years data set. [ABSTRACT FROM AUTHOR]

Deregulation of the trucking industry and significantly lowered transportation costs led to large, widespread, and plausibly exogenous reductions in inventory for U.S. firms, with consequent increased supply-chain disruption (SCD) costs. We find evidence that increased SCD costs help explain the puzzling long-term trend of increasing average U.S. firm cash holdings. We also find that firms facing higher expected costs of disruptions generally save more cash from capital freed up via supply-chain management innovations. Finally, we document significant postdisruption declines in cash holdings consistent with cash as a primary source of financing during disruptions. [ABSTRACT FROM PUBLISHER]

We consider a stochastic cash balance problem in which cash receipts and cash disbursements change linearly and form a fluid process. The firm has to decide how much cash to hold in order to meet its obligations. The cash balance is monitored continuously and a four thresholds (0, S, M, m) policy is used to control the cash ( 0 < S < M < m ). That is, (a) If, at any time, the cash level drops to an order-level 0, a cash transfer of size S is requested such that the cash level is immediately raised to level S. (b) Whenever the cash level lies within the interval (0, m), no action is taken. (c) Every time the cash balance reaches the salvage-level m, it is restored to a level M and the excess amount (m - M) is invested in other earning assets that provide a suitable return. We further study the extended (s, S, M) policy, in which s be an order level and each request for a cash transfer takes some random time (called the lead-time) until it is approved. Using fluid-flow results and multi-dimensional martingales, we construct a closed-form expression for the discounted total cost of running the cash balance. Numerical study provides several guidelines for the optimal control. For example, we show that even when the holding cost is high and receipts occur more frequently, it would be wise for the firm to hold on some extra cash. [ABSTRACT FROM AUTHOR]

Relying on panel firm-level data from an emerging economy, the paper postulates and empirically verifies the pattern of a U-shaped relationship between cash flows and cash holdings. The positive cash-cash flow sensitivity is postulated to be driven by precautionary motive, which is engendered by excessive volatility of cash flows. Therefore, cash accumulation appears to serve the primary purpose of mitigating the problem of unpredictability of cash flows. While revealing no significant cash-cash flow relationship for the majority of firms, the analysis of firm-level cash-cash flow sensitivity coefficients shows that the companies with the lowest and the highest cash flows maintain disproportionately higher cash reserves than their counterparts with intermediate cash flows. The firms exhibiting negative cash-cash flow relationship are found to be of younger age, smaller size, lower liquidity, and asset tangibility than the remainder of the research sample. These firms are evidenced to accumulate cash reserves from equity issuances, while their overall capacity to procure external financing remains impaired. Their financing patterns are reminiscent of the agency problem of 'gambling for resurrection'. In turn, the firms exhibiting positive cash-cash flow sensitivity are documented to maintain cash reserves in order to be able to alleviate cash flow volatility. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to consider the effect of the chief executive officer's (CEO) ability on the amount of cash stock at the firm level. Design/methodology/approach: The empirical hypothesis is examined via fixed-effect regression models using data from US incorporated firms. Findings: Consistent with the upper echelon theory and cash holding motives, the results reveal that able CEOs are associated with an increased level of cash stock, ceteris paribus. Further analysis shows that the association between CEO ability and firm cash holding is more profound for financially sound firms. The authors also demonstrate that firm size significantly affects the relationship between CEO ability and cash management. The results are robust to various sensitivity analyses and additional tests. Research limitations/implications: This work is subject to limitations inherent in the use of relevant proxies. Thus, the study implements several model specifications to ensure the validity of findings in a more generic context. Future research should investigate the board structure's role and the monitoring procedures on the CEOs' cash holding behavior as a natural extension to this study. Practical implications: The insights derived from the study are expected to advance the decision-making process of cash policies and CEO selection for shareholders, business executives and investment strategists. Originality/value: Overall, the study provides new evidence that CEO ability is a contingent factor of corporate cash stock. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to investigate the effect of Shariah compliance status on corporate cash holding decision. Design/methodology/approach: This study applies ordinary least square and generalized method of moments regression models for a sample of 178 Malaysian listed firms over the period 2008–2017. Findings: The results show that Shariah compliance has positive impact on the level of cash reserves of firms. It is also found that Shariah-compliant (SC) firms quickly adjust their level of cash holdings toward a target level than non–Shariah-compliant (NSC) firms. These results can be explained by the restrictions imposed by Shariah rules on firms to sustain their compliance status. Further, the results reveal that SC firms are likely to hold more cash out of their cash flows. This is the expected result, as the firms operating within the ambit of Shariah rulings and regulations face external financing constraints. Practical implications: This study has important implications for managers, policymakers and regulators. For managers, the study is an important reference to understand and design cash management policies by considering restrictions imposed by Shariah regulations. In particular, managers should pay more attention to periods of credit crunch and weak economic conditions in which SC firms may be exposed to greater bankruptcy risks. For policymakers and regulators, this study may be useful in assessing the effect of the restrictions imposed by Shariah law on firm's cash holding decision. Therefore, in an effort to increase the supply of external financing available to SC firms, policymakers should encourage the issuing of Islamic financial products. Originality/value: This paper focuses on SC firms where financial constraints are bound to be more stringent than for NSC firms. It explores the implications of relevant Islamic principles on corporate cash holdings. [ABSTRACT FROM AUTHOR]

From 1998 to 2011, U.S. firms held more cash on average (but not at the median) than similar foreign firms (foreign twins) did. The average difference in cash holdings does not increase after 2008, and it is driven by highly R&D-intensive U.S. firms. Because there are almost no similarly R&D-intensive foreign firms, mean comparisons involving these U.S. firms are not reliable. Without these U.S. firms, neither U.S. multinational firms nor purely domestic U.S. firms hold more cash than their foreign twins do. Country characteristics have negligible explanatory power for differences in cash holdings between U.S. firms and their foreign twins. [ABSTRACT FROM AUTHOR]

The decision-making of cash holdings is very important for the daily operation of enterprises. This present paper tries to establish uncertain optimal cash holding models with the constraint of safe cash holding area, and discusses the solutions of the models by establishing Lagrange function under KKT condition. On the one hand, this paper enriches the existing cash holding models, on the other hand, it is also a comprehensive discussion on the application of uncertainty theory in cash holding management. [ABSTRACT FROM AUTHOR]

Copyright of Financing is the property of Financing and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: The aim of this study is to investigate the effect of foreign institutional investors (FII) on the contribution of cash and dividend to firm's value in the context of Japan. Design/methodology/approach: This study used a sample of 1,929 nonfinancial firms listed in Tokyo Stock Exchange in the period from 2002 to 2016. For data analysis, pooled OLS regression with firm and year fixed effect is applied. Further, the p-value of difference is used to test the null hypothesis of equal coefficients. Findings: The findings depict that cash holdings contribute more to firm's value when ownership by FII is high. Contrarily, dividends contribute more to firm's value when ownership by FII is low. The results remain consistent after using excess cash holdings instead of cash holdings and after re-estimating the main regression model in the presence of top 30% and bottom 30% ownership level. Research limitations/implications: This study is limited to Japanese nonfinancial sector. The results implied that firms where the probability of managerial agency cost and expropriation of cash is high, the presence of FII mitigates the agency cost and positively influences the contribution of cash to firm's value. Overall, this research highlighted the disciplinary and monitoring role of FII in Japan. Originality/value: This study provides new insights on the monitoring and governance role of foreign institutions, showing that FII promote better cash management and utilization, which significantly affects the contribution of cash holdings to firm's value. [ABSTRACT FROM AUTHOR]

We investigate corporate financial policies in the presence of both temporary and permanent shocks to firms’ cash flows. In our framework, cash flows can be negative and are imperfectly correlated with firm value, and earnings volatility differs from asset volatility. These results are consistent with empirical stylized facts. They are also contrary to the implications of existing dynamic capital structure models that allow only for permanent shocks to cash flows. Temporary shocks increase the importance of financial flexibility and may provide an intuitively simple and realistic explanation of empirically observed financial conservatism and low leverage phenomena. The theoretical framework developed in this article general enough to be used in various corporate finance applications. [ABSTRACT FROM PUBLISHER]

A discussion is presented of the article "Why Do Managers Voluntarily Issue Cash Flow Forecasts?," by Charles E. Wasley and Joanna Shuang Wu, in this issue. The author commends Wasley and Wu for their contributions to accounting literature regarding cash flow forecasts and notes that the data gathered will be useful for future research. Limitations of the study are noted and discussed. The article urges further study into the issue of cash flow forecasts, focusing on the business environment surrounding their use.

Agency problems are an important determinant of corporate cash holdings. For a sample of more than 11,000 firms from 45 countries, we find that corporations in countries where shareholders rights are not well protected hold up to twice as much cash as corporations in countries with good shareholder protection. In addition, when shareholder protection is poor, factors that generally drive the need for cash holdings, such as investment opportunities and asymmetric information, actually become less important. These results are stronger after controlling for capital market development. Indeed, consistent with the importance of agency costs, we find that firms hold larger cash balances when access to funds is easier. Our evidence is consistent with the conjecture that investors in countries with poor shareholder protection cannot force managers to disgorge excessive cash balances. [ABSTRACT FROM AUTHOR]

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 level of cash holdings, firms were divided into two groups of firms with or without excess cash holdings. The results of the study revealed that lower optimal level of cash holdings increases adverse selection. In addition, higher optimal level of cash holdings leads to moral hazard. In other words, the findings confirmed both pecking order and free cash flow theories. The findings imply that there is a positive relationship between information asymmetry and marginal value of cash holdings. Such a relationship will gradually decrease when the firms hold higher than optimal level of cash and translate into a negative one. [ABSTRACT FROM AUTHOR]

This paper presents evidence about how research and development (R&D) expenditures affect corporate cash holdings in European country groups that differ in their innovation capacity. In theory, one can expect intangible investments such as R&D to result in higher cash stocks than fixed investments, particularly because intangible capital is less suitable as collateral for obtaining external funds. The relationship can be expected to be particularly strong in innovative countries. These countries carry out a relatively high proportion of cutting-edge R&D, which tends to be particularly risky and may be associated with substantial gestation lags before becoming productive. These features tend to increase firms' precautionary cash holdings. To investigate this issue in a European context, we examine different groups of countries that are clustered based on differences in their innovative capacity. Our estimation results confirm a positive relation between changes in R&D investment and changes in cash holdings, whereas changes in fixed investment do not appear to be related to changes in cash positions. The impact of changes in R&D on cash tends to be higher for country groups characterized by a high level of innovative capacity than for countries with moderate levels of innovative capacity. However, the differences across country groups are less pronounced than expected. [ABSTRACT FROM AUTHOR]

We examine how corporate cash management in Korea has evolved during the COVID-19 crisis, focusing on the interaction between COVID-19-related uncertainty and financing frictions. Compared with the 2008 global financial crisis, massive expansionary financial policy measures have resulted in low external financing costs shortly after the early negative shocks to external financing. This provides a unique opportunity to investigate the separate effects of uncertainty and financing frictions on corporate cash holdings. Consistent with the precautionary motive for cash holdings, we find that firms reserve more cash in 2020 in response to the increased uncertainty; this is especially the case if they are negatively affected by the COVID-19 crisis and financially constrained. However, unaffected firms with better access to financial markets and internal capital markets also increase their cash holdings. The COVID-19 pandemic does not systematically change corporate cash management policies. In 2021, firms decrease their cash holdings as uncertainty declines. Overall, our evidence implies that uncertainty is the primary determinant of corporate cash management decisions, whereas financing frictions play a secondary role. We discuss the policy implications of the amplified inequality between financially constrained and unconstrained firms resulting from massive expansionary financial policy measures. • COVID-19 uncertainty is the primary determinant of cash management. • Expansionary financial policies mitigate uncertainty's effect. • Financially constrained firms reserve cash to cope with uncertainty. • Among firms not suffering from the COVID-19 crisis, unconstrained firms hoard cash. • Expansionary policies widen the inequality among constrained and unconstrained firms. [ABSTRACT FROM AUTHOR]

Copyright of JDM: Jurnal Dinamika Manajemen is the property of Universitas Negeri Semarang, Fakultas Ekonomi, Jurusan Manajemen and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Abstract: We find that acquirers’ announcement returns decline with their cash holdings, but only when at least part of the payment is in the form of stock. We further find evidence that acquirers that use stock payment are overvalued, especially when they have excess cash that they could have used instead. Collectively, our results suggest that investors interpret announcements of stock acquisitions as a signal that the acquirers’ equity is overvalued and that high cash holdings intensify this signal. However, our results are inconsistent with the common belief that cash holdings induce value‐destroying acquisitions. [ABSTRACT FROM AUTHOR]

The decision-making process regarding cash allocation, especially in times of recession, is somewhat challenging. Thus, the aim of this study is to evaluate the effects of the financial crisis in cash holdings of privately-held firms in the Brazilian sugarcane industry. For this purpose, a unique, hand-collected panel data of 31 firms for the period from 1998 to 2015 was used. The results show that the private firms of the industry maintain higher levels of cash than the average found by studies with Brazilian public companies. Furthermore, between the two dummy variables used, representing the subprime crisis and the most recent economic crisis in Brazil, only the second one was significant. Finally, in order to overcome the adverse conditions of the current Brazilian economic crisis, it was observed an increase in cash holdings, which, in turn, denotes the relevance of precautionary reasons in the understanding of cash management. [ABSTRACT FROM AUTHOR]

This study investigates whether corporate social responsibility (CSR) reports mitigate the value destruction associated with increases in cash holdings. We find that the issuance of a standalone CSR report increases the marginal value of cash holdings and this effect is more pronounced for firms in a less transparent information environment and for firms with weaker external monitoring. Our results suggest that information in CSR reports can facilitate monitoring and thus induce more efficient use of cash holdings. [ABSTRACT FROM AUTHOR]

We use a unique hand-collected dataset on corporate lawsuits to examine the relationship between litigation risk and cash holdings. We find that an increase in litigation risk is associated with a significant increase in cash holdings. In addition, we document a positive relationship between the level of cash holdings and lawsuits related to the violations of labor, intellectual property, contracts, securities, environmental, product liability, medical liability, and other laws. [ABSTRACT FROM AUTHOR]

We construct a model to show that predatory strategies by a financially strong rival can cause a financially weak firm to underinvest. This threat intensifies when the two firms produce similar products and share similar future investment opportunities. We show that cash holdings become more valuable by providing liquidity to fund investment opportunities as they emerge, thereby mitigating the underinvestment problem. Empirical evidence supports these model predictions. The value of cash is significantly higher for firms facing higher predatory threats. The results are robust to various controls for financial constraints, corporate governance, risk factors, and industry-level measures of product market competition. An identification strategy that exploits exogenous variation in financial constraints further corroborates the causal effect of predatory threats on the value of cash. [ABSTRACT FROM AUTHOR]

Using a quantile regression approach with a sample of Korean firms, this paper empirically investigates whether cash holding behaviors with the precautionary motive are different between Chaebol and non-Chaebol firms and they have changed before and after the financial crisis. We obtain the following empirical results. First, for non-Chaebol firms, the precautionary motive plays an important role in determining cash holdings throughout the sample period. In contrast, there is no empirical evidence supporting that Chaebol firms hold cash with the precautionary motive in the pre-crisis period: This motive becomes important only in the post-crisis period. Second Chaebol firms' cash holdings with the precautionary motive are different from those of non-Chaebol firms in the pre-crisis period, but not in the post-crisis period. These imply that after experiencing financial crisis, Chaebol firms' cash holding strategy has been changed substantially in a way to become more cautious in dealing with cash flow (CF) volatility. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to profile how ample cash holdings can serve as a competitive advantage by first mitigating the risk of becoming a forced seller during times of distress, and then positioning a firm to take strategic advantage of forced selling and other forms of distress-generated opportunities. Design/methodology/approach – The author reviews the changing role of cash over time in corporate strategy, and how inadequate cash has caused or contributed to corporate failures. Findings – The findings of this paper, which are supported by historical and contemporary examples, are that ample cash reserves can be a powerful source of comparative advantage. Practical implications – This article supports earlier work published in Strategy & Leadership that shows how Graham-and-Dodd-based analysis is a viable avenue of academic research and a viable method with which to assess and formulate corporate strategic initiatives such as mergers and acquisitions, share buy-backs, risk management and, in this case, the strategic uses of cash. Originality/value – This paper offers leaders and financial executives a practical explanation of how ample cash holdings can serve as a competitive advantage. [ABSTRACT FROM AUTHOR]

Given the particular strengths, weaknesses, and peculiarities of family firms as well as the importance of liquidity in today's marketplace, we analyze the distinct characteristics and strategies of family businesses related to the amount of cash a firm holds. We look beyond the traditional factors that influence decisions related to cash management to examine factors that are particularly important for family firms. Specifically, we outline the relevance of strategic decisions guided by family firms' conservatism, flexibility, long-term view, and the active control that they have over family members. To our knowledge, no prior studies exist regarding family firms and their strategic adjustment of cash holding. Therefore, we investigate whether the ownership structure of the firm (through the presence of a controlling family) moderates decisions on cash holding. We found that family firms tend to accumulate cash for strategic reasons and as a result of their own idiosyncrasies. Thus, family firms can achieve optimal cash accumulation more efficiently than non-family firms. [ABSTRACT FROM AUTHOR]

This research expands on previous studies of cash holdings and their determinants by studying the relationship between the degree of internationalization and the level of corporate cash holdings. We used a sample of non-financial, publicly traded companies from Brazil and Mexico for the period from 2006 to 2010. Our results suggest that the degree of internationalization is a determinant of cash, and that cash holding increases quadratically as the degree of company internationalization grows. Such behavior was different from the North American company studies in Chiang and Wang (2011). Similar to previous studies, both Trade-off and Pecking Order predictions are relevant control variables in our model. Finally, companies held less cash on their balance sheets during the pre-crisis period. [ABSTRACT FROM AUTHOR]

Prior studies show that agency conflicts are important in explaining corporate financial policies and that the board of directors is central to corporate governance. In this study, we examine the role of this governing body in the accumulation of cash reserves. Using a sample of 597 French listed firms during 2001-2007, we find that firms with boards deemed to be effective in mitigating agency problems-that is, those appointing independent directors and splitting chief executive officer and chair positions-accumulate less cash reserves than those with less effective boards. Moreover, two-tier boards are more efficient in mitigating the agency costs of free cash flow, leading to less corporate cash hoarding. These findings support the idea that agency conflicts influence cash management policy and that effective boards of directors play an important disciplinary role in a concentrated ownership setting. [ABSTRACT FROM AUTHOR]

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 embodied in these two theories to hypothesize and test a quadratic functional relationship of returns to cash measured by Tobin's q. We also build and test a related novel hypothesis of scale-dependent returns to cash based on the competitive strategy concept of strategic deterrence. Tests for both of these hypotheses are positive and show that returns to cash continue to increase far beyond transactional needs. Copyright © 2013 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Using the distinctions among the convexity, magnification, and translation effects, we identify the pertinent parameters and examine empirically the relation between cash holdings and option-based managerial compensation. We show that changes in delta reduce the effects of magnification and convexity on managerial risk aversion. We also provide evidence that there is a negative relation between the option-based incentives delta and vega and cash holdings. These results are robust when incentives are extended to include all executive board members and when the sample is broken down according to different risk characteristics. [ABSTRACT FROM AUTHOR]

We examine the impact of managerial incentive on firms' cash holdings policy. We find that firms with more equity-based compensation have more cash reserves. We also find that managers with equity-based compensation strongly prefer internal investment through R&D and capital expenditures. Furthermore, we find that firms with both high cash and high equity-based compensation subsequently experience higher operating performance. The results suggest that higher cash reserves in firms with higher equity-based compensation are the result of a decision by managers to provide flexibility to fund profitable projects, rather than wasting it, which improves firm value through increasing future profitability. [ABSTRACT FROM AUTHOR]

Small and medium enterprises have a growing role and influence on the increase of production, and therefore on greater economic growth. By the Law of fiscalization enterprises which receive cash money for their products and services shall embed systems for fiscalization. According to Law of fiscalization in circulation of cash, fiscalization represents a set of measures implemented by the tax payers,in order to enable effective monitoring of realized turnover in cash. Although, the Law provides system components for the implementation of fiscalization such as unique account identifier, elements of accounts, protective code of the issuer, etc., it leaves enough space to upgrade the system to provide services and assistance to small and medium sized enterprises. Systems that are offered on the market, represent an additional workload on enterprises as an economic as well as technological. The authors explore the possibility of a new model of a system based on Cloud Computing, SaaS model. The model in this manner, hardware and software infrastructure is provided as a service. Accordingly, companies will not have the need for a large initial investment in ICT infrastructure, and later maintenance requirements. Service would be paid by the model pay as you go. Also, the paper will present a comparative analysis of the system for implementation of fiscalization based on technological and cost components. [ABSTRACT FROM AUTHOR]