Determinants of a firm's cash holdings have been a popular topic of research in finance, especially after the rapid surge in cash holdings for U.S. firms since the 1980s. The wide array of research has focused primarily on firm-specific factors to explain the cross-sectional variations but has...

I use a matched buyer-supplier sample of U.S. industrial firms to investigate the impact of customer risk on suppliers' choice between cash and lines of credit as a source of liquidity. I find that customer risk decreases the reliance on bank-managed liquidity insurance relative to cash. This...

We study the effect of systematic uncertainty on firms' precautionary saving motives. As systematic uncertainty changes firms' operational and investment policies, its implications on firm cash holdings remain unclear. Using a GARCH-model based methodology, we construct novel, forward-looking...

I quantify a new motive of holding cash through the channel of financing risk. I show that if the access to future credit is risky, firms may issue long-term debt now and save funds in cash to secure the current credit capacity for the future. I structurally estimate the model and find that this...

The measurement of firms funding liquidity risk is in general complex. In particular, liquidity insolvency happens the first time the firm cannot generate sufficient counterbalancing capacity from the liquidity hedging portfolio to cover the funding gap. The complexity arises from the fact that...

According to Zingales (1999), corporate governance is defined as the complex set of constraints that shape the ex-post bargaining over the quasi-rents generated by a firm. This paper argues that corporate cash holdings and dividend policy can be used as soft constraints in this regard in order...

Using a quarterly panel of U.S. corporations over the period 1985 – 2014 we show that corporate managers respond to political uncertainty and economic policy uncertainty shocks in different ways. We proxy for political uncertainty using the Partisan Conflict Index and employ a prevalent...

We develop a unified framework to connect cash holding, debt maturity and mergers and acquisitions. We provide empirical support for four internally consistent predictions: i) equity and debt values of highly distressed firms are more sensitive to cash reserve than those of healthy firms; ii)...