The Savings of Corporate Giants

48 Pages Posted: 2 Apr 2020 Last revised: 9 Nov 2023

See all articles by Olivier Darmouni

Olivier Darmouni

Columbia University - Columbia Business School, Finance

Lira Mota

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: November 9, 2023

Abstract

We construct a novel panel dataset to provide new evidence on how the largest nonfinancial firms manage their financial assets. Our granular data show that, over the past decade, bond portfolios have grown to be at least as large as cash-like instruments, driven by the meteoric rise of corporate bond holdings. To shed light on the drivers of this growth, we conduct a pair of event studies around the 2017 tax reform and the 2020 liquidity crisis. We find that large holdings of marketable securities are primarily driven by cross-border tax incentives, while cash-like instruments are driven by liquidity motives.

Keywords: Superstar firms, corporate cash, corporate bonds, repatriation tax, liquidity management

JEL Classification: G32, G35, G11, E440

Suggested Citation

Darmouni, Olivier and Mota, Lira, The Savings of Corporate Giants (November 9, 2023). Available at SSRN: https://ssrn.com/abstract=3543802 or http://dx.doi.org/10.2139/ssrn.3543802

Olivier Darmouni (Contact Author)

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States

Lira Mota

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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