Financing constraints and firms’ cash policy in the euro area

Pál, Rozália; Ferrando, Annalisa

doi:10.1080/13518470903075748

Cited by 52 publications

(38 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…These models have stimulated a wide stream of literature investigating the determinants of cash holdings, mainly among publicly traded corporations, from both the United States (e.g., Kim, Mauer, & Sherman, 1998;Opler et al, 1999) and Europe (e.g., Ferreira & Vilela, 2004;Pál & Ferrando, 2010). A few studies address the cash policy of private firms in the United States (Steijvers & Niskanen, 2013) and Europe (Bigelli & Sánchez-Vidal, 2012;García-Teruel & Martínez-Solano, 2008).…”

Section: Cash Holdingsmentioning

confidence: 99%

Cash holdings in family firms: CEO identity and implications for firm value

Caprio

Giudice

Signori

2019

Euro Fin Management

View full text Add to dashboard Cite

We investigate the cash holdings policy of family firms and examine potential value implications. Family firms hold more cash than other firms, with an average difference of 2.3% of total assets. This result is driven by firms managed by heir CEOs. While the cash holdings policy of first‐generation family firms is more sensitive to firm risk, consistent with founders’ increased risk aversion, that of later‐generation firms is more sensitive to information asymmetry and agency conflicts. Heir CEOs’ cash policies destroy value, as the marginal value of an additional Euro suffers from a 38.3‐cent discount, on average, relative to non‐family firms.

show abstract

Section: Cash Holdingsmentioning

confidence: 99%

Cash holdings in family firms: CEO identity and implications for firm value

Caprio

Giudice

Signori

2019

Euro Fin Management

View full text Add to dashboard Cite

show abstract

“…A quickly growing body of research shows that important drivers of precautionary cash holdings include income uncertainty due to riskier cash flows (Riddick & Whited, 2009), financing constraints due to poor access to external capital (Han & Qui, 2007;Pal & Ferrando, 2010) or higher financing costs due to informational asymmetries between investors and managers (Almeida et al, 2004). This strand of research also suggests that firms with better investment opportunities hold more cash because adverse shocks and financial distress are more costly for them (Opler et al, 1999).…”

Section: Cash Policy Motivesmentioning

confidence: 99%

Market Share and Cash Policy: Evidence from Western European Companies

Schoubben¹,

Hulle

Leuven³

2012

IJEF

View full text Add to dashboard Cite

This study analyses the impact of market share on corporate cash policy in a static as well as a dynamic framework. Using a panel data set of large firms in 14 European countries, we show that firms with high market share tend to have lower cash holdings. This relationship between market share and cash policy is most apparent when predation risk, measured using either the similarity of a firm's technology with its industry rivals or market concentration, is high. These findings are robust for different estimation methods, different variables definitions, and for controlling for possible endogeneity between cash holdings and market share.

show abstract

“…As a first step, the studies measure firm productivity and in the next step, the OLS or GMM method is employed to regress the effect of financial constraints on firm's productivity (Musso & Schiavo, 2008;Gatti & Love, 2008;Levine & Warusawitharana, 2014;Moreno-Badia & Slootmaekers, 2009;Nunes et al, 2007;Guan & Lansink, 2006;Chen & Guariglia, 2013, Li et al, 2018Jin et al, 2019). The second group estimate production function directly by adding financial constraints variables to production function (Nickell & Nicolitsas, 1999;Nucci et al, 2005;Chen & Guariglia, 2013;Pál & Ferrando, 2010;Ferrando & Ruggieri, 2015. However, the results from the studies are heterogeneous in terms of both economic significance and the direction of the effects of financial constraints on productivity growth.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of financial constraints on the development of Vietnam’s firms

Viet¹,

Quynh²,

Trung³

2020

10.5267/j.msl

View full text Add to dashboard Cite

This paper examines the impact of financial constraints on the development of Vietnamese firms driven by Total Factor Productivity (TFP) growth at the firm level. The effects of financial constraints by FCIf index on TFP growth of 97,860 firms are estimated by applying Dynamic Panel Data model over the period 2012-2017. The results show that there was a negative correlation between FCIf and labor productivity growth and TFP growth in all industries. While FCIf index is increased by 0.1, TFP growth of firms is reduced by 3.71%. The results also show that there was an inverse relationship between FCIf index, and the size of value added and assets of firms. Firms operating in manufacturing, wholesale and retail trade, and private firms face the biggest financial constraints.

show abstract

Financing constraints and firms’ cash policy in the euro area

Abstract: 4 Non-technical summary 5

Cited by 52 publications

References 29 publications

Cash holdings in family firms: CEO identity and implications for firm value

Cash holdings in family firms: CEO identity and implications for firm value

Market Share and Cash Policy: Evidence from Western European Companies

Impact of financial constraints on the development of Vietnam’s firms

Contact Info

Product

Resources

About