Excess cash holdings and shareholder value
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|Title:||Excess cash holdings and shareholder value||Authors:||Lee, Edward
|Permanent link:||http://hdl.handle.net/10197/7479||Date:||Jun-2011||Abstract:||We examine the determinants of corporate cash holdings in Australia and the impact on shareholder wealth of holding excess cash. Our results show that a trade-off model best explains the level of a firm’s cash holdings in Australia. We find that 'transitory' excess cash firms earn significantly higher risk-adjusted returns compared to 'persistent' excess cash firms, suggesting that the market penalises firms that hoard cash. The marginal value of cash also declines with larger cash balances, and the longer firms hold on to excess cash. The results are consistent with agency costs associated with persistence in excess cash holdings.||Type of material:||Journal Article||Publisher:||Wiley||Copyright (published version):||2010 the Authors||Keywords:||Transactions cost; Trade-off; Stock performance; Marginal value of cash; Persistence||DOI:||10.1111/j.1467-629X.2010.00359.x||Language:||en||Status of Item:||Peer reviewed|
|Appears in Collections:||Business Research Collection|
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