Uncertainty and the Value of Cash Holdings

13 Pages Posted: 28 Feb 2017 Last revised: 26 Dec 2017

See all articles by Hyun Joong Im

Hyun Joong Im

The University of Seoul

Heungju Park

Sungkyunkwan University - SKK Business School

Gege Zhao

Peking University - HSBC School of Business

Date Written: February 27, 2017

Abstract

We find that a firm facing higher uncertainty has a higher value of cash. This effect is attributed to the increased value of the option to wait and see as well as the aggravated financial constraints and mitigated agency conflicts.

Keywords: Uncertainty, Cash Holdings, Real Options, Financial Constraints, Agency Costs

JEL Classification: D22, D81, D92, G31, G32, G34

Suggested Citation

Im, Hyun Joong and Park, Heungju and Zhao, Gege, Uncertainty and the Value of Cash Holdings (February 27, 2017). Economics Letters, 155, 2017, pp. 43-48, Available at SSRN: https://ssrn.com/abstract=2924046

Hyun Joong Im (Contact Author)

The University of Seoul ( email )

163 Seoulsiripdae-ro
Dongdaemun-gu
Seoul, 02504
Korea, Republic of (South Korea)
+82-2-6490-2268 (Phone)
+82-2-6490-2219 (Fax)

Heungju Park

Sungkyunkwan University - SKK Business School ( email )

Seoul
Korea, Republic of (South Korea)

Gege Zhao

Peking University - HSBC School of Business ( email )

University Town
Shenzhen, 518055
China

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