Cash Holdings, Working Capital and Firm Value: Evidence from France
22 Pages Posted: 12 May 2011 Last revised: 17 Jul 2022
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: Suggested Citation
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