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Cash Holdings: Determinants and Impact on Future Operating Performance for Listed vs. Unlisted Firms

50 Pages Posted: 26 Mar 2012 Last revised: 5 Sep 2014

Date Written: December 6, 2012

Abstract

Research suggests that the cash ratios of private firms are lower than the ones of public firms, which is not consistent with an expectation for increased importance of the precautionary motive for firms with fewer funding options. The study provides a significant explanation on these lower ratios, attributed to differences in leverage, capital expenditures, internally generated cash flows, and corporate governance. The study finally testifies that excess cash holdings are positively associated with future operating performance for private, but not public firms, a finding which is interpreted as a manifestation of capital raising constraints for unlisted vs. listed firms.

Keywords: cash policy, private firms, liquidity, performance

JEL Classification: G32, M40

Suggested Citation

Anagnostopoulou, Seraina C., Cash Holdings: Determinants and Impact on Future Operating Performance for Listed vs. Unlisted Firms (December 6, 2012). Review of Pacific Basin Financial Markets and Policies (RPBFMP), Vol. 16, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=2028605 or http://dx.doi.org/10.2139/ssrn.2028605

Seraina C. Anagnostopoulou (Contact Author)

ESCP Europe ( email )

527 Finchley Road
London, NW3 7BG
United Kingdom

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