The Evolution of Corporate Cash

74 Pages Posted: 7 Jul 2016 Last revised: 22 Jun 2018

See all articles by John R. Graham

John R. Graham

Duke University; National Bureau of Economic Research (NBER)

Mark T. Leary

Washington University in St. Louis - Olin Business School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: May 25, 2018

Abstract

We study time-series and cross-firm variation in corporate cash holdings over the past century. The recent increase in cash is not unique in magnitude. However, the recent divergence between average and aggregate cash is new and entirely driven by a shift in cash policies of newly public firms, while within-firm changes are negative or flat since the 1940s. Cross-sectional relations between cash holdings and firm characteristics are stable through the century, though characteristics explain little of the trends in aggregate cash. Macroeconomic conditions, corporate profitability and investment, and (since 2000) repatriation taxes explain aggregate cash over the last century.

Keywords: Cash, Liquidity, IPO, Economic Growth

JEL Classification: G32, E51, H32, N1

Suggested Citation

Graham, John Robert and Leary, Mark T., The Evolution of Corporate Cash (May 25, 2018). Available at SSRN: https://ssrn.com/abstract=2805505 or http://dx.doi.org/10.2139/ssrn.2805505

John Robert Graham

Duke University ( email )

Box 90120
Durham, NC 27708-0120
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919-660-7857 (Phone)
919-660-8030 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Mark T. Leary (Contact Author)

Washington University in St. Louis - Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

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