The Financial Assets of Non-Financial Firms

54 Pages Posted: 2 Apr 2020 Last revised: 24 Dec 2020

See all articles by Olivier Darmouni

Olivier Darmouni

Columbia University - Columbia Business School

Lira Mota

Columbia University - Columbia Business School, Finance

Date Written: December 24, 2020

Abstract

We construct a novel panel dataset to provide new evidence on how the largest nonfinancial firms manage the composition of their financial assets. 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 two event studies around the 2017 tax reform and the 2020 liquidity crisis. Our evidence suggests large firms often actively manage their financial portfolios in a way that reflects tax incentives and reach for yield as opposed to financial constraints.

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 Financial Assets of Non-Financial Firms (December 24, 2020). 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 ( email )

3022 Broadway
New York, NY 10027
United States

Lira Mota

Columbia University - Columbia Business School, Finance ( email )

NY
United States
10027 (Fax)

HOME PAGE: http://sites.google.com/view/liramota

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