|Title:||Why Has the Value of Cash Increased over Time?||Authors:||Bates, Thomas W.
Chi, Jianxin Daniel
|Issue Date:||1-Apr-2018||Publisher:||CAMBRIDGE UNIV PRESS||Journal Volume:||53||Journal Issue:||2||Start page/Pages:||749||Source:||Journal of Financial and Quantitative Analysis||Abstract:||
© 2018 Michael G. Foster School of Business, University of Washington. The value of corporate cash holdings has increased significantly in recent decades. On average, $1 of cash is valued at $0.61 in the 1980s, $1.04 in the 1990s, and $1.12 in the 2000s. This increase is predominantly driven by the investment opportunity set and cash-flow volatility, as well as secular trends in product market competition, credit market risk, and within-firm diversification. We document a secular decrease in the speed of adjustment (SOA) in cash holdings, particularly for financially constrained firms with cash deficits, suggesting that capital market frictions can account for the trend in the value of cash holdings.
|Appears in Collections:||財務金融學系|
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