Technology Spillovers and Corporate Cash Holdings

45 Pages Posted: 2 Nov 2012 Last revised: 24 Feb 2015

See all articles by Jiaping Qiu

Jiaping Qiu

McMaster University - Michael G. DeGroote School of Business

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance

Date Written: May 23, 2014

Abstract

This study examines the effect of technology spillovers on firms’ cash holdings. It finds that firms facing greater technology spillovers hold higher cash balances. This effect is more pronounced among financially constrained firms and for firms that are likely to benefit more from diffused technology, e.g., those have newer patents, are more profitable, and face better growth opportunities. The spillover impact remains strong when product market competition and own-firm innovations are accounted for. Overall, our study identifies technology spillovers as an important factor in determining corporate cash policy.

Keywords: technology spillovers, product market competition, cash holdings, dividend payouts

JEL Classification: G32, G35, L10

Suggested Citation

Qiu, Jiaping and Wan, Chi, Technology Spillovers and Corporate Cash Holdings (May 23, 2014). Available at SSRN: https://ssrn.com/abstract=2170050 or http://dx.doi.org/10.2139/ssrn.2170050

Jiaping Qiu (Contact Author)

McMaster University - Michael G. DeGroote School of Business ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

Chi Wan

University of Massachusetts Boston - Department of Accounting and Finance ( email )

Boston, MA 02125
United States

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