Cash Holdings, Working Capital and Firm Value: Evidence from France

22 Pages Posted: 12 May 2011 Last revised: 30 Jul 2013

See all articles by Ruta Autukaite

Ruta Autukaite

EDHEC Business School

Eric Molay

University of Nice-Sophia Antipolis

Date Written: May 1, 2011

Abstract

The importance of short-term financial decisions to company’s value is considered by testing the following hypotheses: an extra euro invested in cash or in net working capital is valued less than one euro. Running panel data regressions, evidences prove that shareholders undervalue cash holdings and net working capital. The results of this paper alert management not to underestimate importance of cash holdings and working capital management; moreover, the results encourage investors to follow company’s actions in this area to maximise their return on investment.

Keywords: cash holdings, profitability, stock return, working capital

JEL Classification: G30

Suggested Citation

Autukaite, Ruta and Molay, Eric, Cash Holdings, Working Capital and Firm Value: Evidence from France (May 1, 2011). International Conference of the French Finance Association (AFFI), May 11-13, 2011. Available at SSRN: https://ssrn.com/abstract=1836900 or http://dx.doi.org/10.2139/ssrn.1836900

Ruta Autukaite

EDHEC Business School ( email )

58 rue du Port
Lille, 59046
France

Eric Molay (Contact Author)

University of Nice-Sophia Antipolis ( email )

GRM - IAE
24, av. des Diables Bleus
NICE cedex 4, 06357
France
+33 492 00 11 01 (Phone)

HOME PAGE: http://www.iae-nice.fr

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