نقدینگی سهام و دارایی های نقدی شرکت ها
Abstract
1- Introduction
2- Data and variables
3- Empirical results
4- Robustness
5- Conclusion
Appendix. Supplementary materials
References
Abstract
This paper investigates the effects of stock liquidity on corporate cash holdings in the U.S. We show that firms with liquid stocks hold less cash after controlling for several firm characteristics, industry and year fixed effects. To mitigate endogenous concerns, we further employ decimalization in the U.S. stock market as an exogenous shock and find the increase in stock liquidity causes firms to reduce cash holdings.
Introduction
Previous studies show that firms hold cash for several reasons, such as transaction motives, precautionary motives and agency motives (Opler et al., 1999; Bates et al., 2009). In static trade off theory, corporate cash holdings are determined by the marginal cost of liquidity assets shortage and the opportunity cost of holding liquidity assets. In agency theory, entrenched managers prefer to hold excess cash. Since cash allows managers to make investment without the monitoring and punishment from the capital market. In this paper, we argue that stock liquidity has a negative effect on corporate cash holdings. First, stock liquidity reduces the cost of equity issuing and debt financing (Butler et al., 2005; Huang et al., 2015), lowering the cost of liquidity assets shortage. Second, stock liquidity can enhance corporate governance through both increasing blockholder intervention and amplifying threat of exit (Edmans et al., 2013), making managers less entrenched. Hence, according to static trade off theory and agency theory, firms with liquid stocks will hold less cash.