Abstract

http://ssrn.com/abstract=1975491
 
 

Citations (1)



 


 



Why Has the Value of Cash Increased Over Time?


Thomas W. Bates


Arizona State University - Department of Finance

Chinghung (Henry) Chang


National Taiwan University - College of Management

Jianxin Daniel Chi


University of Nevada, Las Vegas (UNLV) - Department of Finance

April 14, 2016


Abstract:     
The value of corporate cash holdings has increased significantly in recent decades. On average, one dollar of cash is valued at $0.61 in the 1980s, $1.04 in the 1990s, and $1.12 in the 2000s. This increase is predominantly driven by firms’ investment opportunity set and cash-flow volatility. Greater product market competition and credit market risk also played a role, however we find no link between the trend in value and the quality of corporate governance. Finally, we document a secular decrease in the speed of adjustment in cash holdings, suggesting that the value gain is attributable to capital market frictions.

Number of Pages in PDF File: 54

Keywords: Cash Holdings; Value of Cash; Financing Frictions; Speed of Adjustment; Agency Conflicts

JEL Classification: G30, G32, G34, G35


Open PDF in Browser Download This Paper

Date posted: December 23, 2011 ; Last revised: April 16, 2016

Suggested Citation

Bates, Thomas W. and Chang, Chinghung (Henry) and Chi, Jianxin Daniel, Why Has the Value of Cash Increased Over Time? (April 14, 2016). Available at SSRN: http://ssrn.com/abstract=1975491 or http://dx.doi.org/10.2139/ssrn.1975491

Contact Information

Thomas W. Bates
Arizona State University - Department of Finance ( email )
W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States
Ching-Hung Chang
National Taiwan University - College of Management ( email )
Department and Graduate Institute of Finance
College of Management
Taipei 106
Taiwan
Jianxin Daniel Chi (Contact Author)
University of Nevada, Las Vegas (UNLV) - Department of Finance ( email )
4505 S. Maryland Parkway
Box 456008
Las Vegas, NV 89154-6008
United States
HOME PAGE: http://sites.google.com/site/jdanielchi/
Feedback to SSRN


Paper statistics
Abstract Views: 1,491
Downloads: 344
Download Rank: 62,787
Citations:  1

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.265 seconds