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Abstract: This study aims to find if a strong Corporate Brand contributes positively to the market value of the firm. The sample in use corresponds to 362 US companies from COMPUSTAT database that were also considered by Fortune in 2002 to construct the America's Most Admired Companies index. The results obtained provide empirical evidence supporting the main hypothesis of the study and are consistent with existing branding theory, that brand activities create shareholders value by increasing the future cash flows. The findings are robust after controlling for other variables that are known from financial theory to impact the firm value and also after correcting the Fortune index for what is known to be the financial halo effect, i.e. by removing the effect created by the past financial performance.
corporate brand, brand, firm value, social responsibility, Fortune and America's Most Admired Companies
Abstract: We investigate the relation between business conditions and corporate liquidity decisions by US firms. We find strong evidence that financially constrained firms hold more cash during recessions and that business conditions are significant to constrained firms' cash decisions. In contrast, we find weak evidence that financially unconstrained firms adjust cash holdings according to the business cycle. This asymmetric behavior is more pronounced for changes in the short-term interest rate. Moreover, we find that firms increase the level of liquidity during periods of tighter credit conditions. Our findings support both the precautionary motive for holding cash and the pecking order theory.
Cash holdings, Liquidity, Business conditions
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