Why Do U.S. Firms Hold So Much More Cash Than They Used To

By Thomas W. Bates, Kathleen M. Kahle, René M. Stulz. 2009

3,179 citations recorded by the source corpus.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/a1bebcca12717dae638c49f2b21f38742a9eddfa

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Citations in the corpus

Precautionary Savings with Risky Assets: When Cash Is Not Cash (2016, positive): “Recent findings also support the importance of the precautionary savings motive in explaining the dramatic increase in average cash holdings (e.g., Bates et al. (2009) and Duchin (2010)) and underscore the importance of precautionary savings in mitigating the impact of the 2008-9 financial crisis…”
Do Managers Overreact to Salient Risks? Evidence from Hurricane Strikes (2017, background): “9 Consistent with this argument, many papers document a positive correlation among various possible sources of cash shortfalls for future and current levels of cash holdings (Kim et al., 1998; Opler et al., 1999; Almeida et al., 2004; Bates et al., 2009; Acharya et al., 2012).”
Is working capital management value-enhancing? Evidence from firm performance and investments (2015, neutral): “…to be more valuable because, among others, larger inventories can prevent input shortages and interruptions in the production process (see, e.g., Blinder and Maccini (1991)); further, increasing trade credit supply can stimulate sales because it allows for price discrimination, serves as a…”
Financial Expert CEOs: CEO’s Work Experience and Firm’s Financial Policies (2014, positive): “…spread has a positive effect suggesting that firms increase their cash holdings at times when external financing is more costly.17 This result is consistent with Almeida, Campello, and Weisbach (2004) and Bates, Kahle, and Stulz (2009) who find evidence of a precautionary motive for cash holdings.”
Financing Frictions and the Substitution between Internal and External Funds (2010, neutral): “Constrained firms’ ability to raise external financing is likely to covary positively with variations in internal cash flows, either because external financing costs decrease when cash flows are high (Bernanke and Gertler (1989)), or because the value of collateral increases with internal cash flows”
Financial Strength and Product Market Behavior: The Real Effects of Corporate Cash Holdings (2010, neutral): “12 See for instance Acharya, Almeida and Campello (2007) or Gamba and Triantis (2007).”
The taxman cometh: Does tax uncertainty affect corporate cash holdings? (2017, positive): “The remaining control variables are consistent with prior research (e.g., Bates et al. 2009) and also fairly consistent across the multinational and domestic subsamples.20 The regression results show that tax uncertainty is a significant predictor of cash holdings.”
Monetary Policy, Corporate Finance and Investment (2018, positive): “(1999), Han and Qiu (2007) and Bates et al. (2009), who document that firms with lower debt and higher cash holdings are more likely financially constrained. (35)As noted by Ottonello and Winberry (2018), the evidence based on grouping firms by leverage is not robust and one may find that the invest”
A theory of corporate financial decisions with liquidity and solvency concerns (2011, positive): “Altogether, the analysis confirms that the explanation in Bates, Kahle, and Stulz (2009), that the recent spectacular expansion in cash holdings among U.S. firms is to a large degree due to the increasing volatility of cash flows, has a theoretical grounding in a model with endogenous cash and…”
Cash is surprisingly valuable as a strategic asset (2014, background): “For example, in 2006 U.S. public firms had more cash than debt on average, a startling finding (Bates, Kahle, and Stulz, 2009).”