We find that a firm facing higher uncertainty has a higher value of cash. This effect is attributed to the increased value of the option to wait and see as well as the aggravated financial constraints and mitigated agency conflicts

We investigate how transient institutional ownership influences the level and value of cash holdings. We show that transient institutional ownership has a positive effect on cash holdings, and this linkage is more pronounced when stock and credit market conditions are less favorable. Using a...

This appendix comprises four parts. The first part presents proofs of lemmas and propositions. The second part presents some additional robustness tests. The third part reports the results of analyses designed to reconcile our results with a prior empirical study on a closely related issue. The...

We show that stock liquidity increases the propensity of firms to raise debt capital. The positive effect of liquidity on a debt issuance propensity is much stronger in firms with greater default risk. The effect of liquidity on the cost of debt capital is much larger than its effect on the cost...

Do firms with liquid stocks hold more cash? If so, why? We show that liquidity has a positive effect on the level and value of cash holdings. Using a regression discontinuity design based on the Russell 1000/2000 index reconstitution, we also show that there is a causal link between liquidity...