Value of Liquidity During Short-Run Financial Management Process, an Address About Doctoral Dissertation

Abstract

Actually determining the value of liquidity is one of the unsolved problems in finance. Firms hold liquidity for a variety of different reasons. Generally, liquidity balances held in a firm can be called considered, precautionary, speculative, transactional and intentional. The first are the result of management anxieties. Managers fear the negative part of the risk and hold liquidity to hedge against it. Second, liquidity balances are held to use chances that are created by the positive part of the risk equation. Next, liquidity balances are the result of the operating needs of the firm. Having information about value of liquidity we can better dissolve the problem of liquidity management. The liquidity management leaning on the information about the value of liquidity drives to increase of the value of the firm.

Keywords: Demand for Liquidity, Liquidity balances, Risk, Uncertainty, Real Options, Option Value of Liquidity, Short-Term Financial Management, Working Capital Management

JEL Classification: G32, G11, M11, D81, O16, P33, P34