Accruals Quality and Corporate Cash Holdings

21 Pages Posted: 31 Jan 2009

Date Written: 2008-07-01

Abstract

This Work Uses Panel Data For Firms Listed In The Spanish Stock Exchange Over The Period From 1995 To 2001 To Analyse The Effect Of Accounting Quality On Cash Holdings. The Results Show That Firms With Good Accruals Quality Hold Lower Cash Levels Than Firms With Poor Accruals Quality. This Finding Suggests That The Quality Of Accounting Information May Reduce The Negative Effects Of Information Asymmetries And Adverse Selection Costs, Allowing Firms To Reduce Their Level Of Corporate Cash Holdings. The Results Also Show That Cash Holdings Decrease When Firms Increase Their Use Of Bank Debt And In The Presence Of Cash Substitutes. In Contrast With This, Firms With Higher Cash Flow Hold Higher Levels Of Cash.

Suggested Citation

García-Teruel, Pedro J. and Martínez-Solano, Pedro and Sánchez-Ballesta, Juan P., Accruals Quality and Corporate Cash Holdings (2008-07-01). Accounting & Finance, Vol. 49, Issue 1, pp. 95-115, March 2009, Available at SSRN: https://ssrn.com/abstract=1335562 or http://dx.doi.org/10.1111/j.1467-629X.2008.00276.x

Pedro J. García-Teruel

University of Murcia ( email )

Department of Management and Finance
Murcia, 30100
Spain
34 868887828 (Phone)
34 868887537 (Fax)

HOME PAGE: http://webs.um.es/pjteruel/miwiki/doku.php

Pedro Martínez-Solano

University of Murcia ( email )

Dpt. Management and Finance
Murcia, Murcia 30100
Spain
34 868 883 747 (Phone)
34 868 887 537 (Fax)

HOME PAGE: http://webs.um.es/pmsolano

Juan P. Sánchez-Ballesta

University of Murcia ( email )

Avda Teniente Flomesta, 5
Murcia, Murcia 30100
Spain

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