Technology Spillovers and Corporate Cash Holdings
45 Pages Posted: 2 Nov 2012 Last revised: 24 Feb 2015
Date Written: May 23, 2014
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
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