The effects of cash-holding motivation on cash management dynamics

Jiang, Jing; Wu, Shanhong

doi:10.1016/j.ribaf.2021.101542

Cited by 9 publications

(5 citation statements)

References 26 publications

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“…Cash holdings are one of the most important corporate factors determining firm survival. Thus, cash holdings can be seen as precautionary savings for various purposes, including investment ( Almeida et al, 2014 , Bates et al, 2009 , Dao et al, 2023 , Dao et al, 2023 , El Ghoul et al, 2023 , Jiang and Wu, 2022 , Machokoto et al, 2022 ). During the COVID-19 crisis, besides government financial support, we conjecture that stockpiled cash holdings could be used to finance investments, thereby reducing investment–cash flow sensitivity.…”

Section: Resultsmentioning

confidence: 99%

COVID-19 and investment–cash flow sensitivity: A cross-country analysis

Thai

Mazur

2023

Research in International Business and Finance

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Section: Resultsmentioning

confidence: 99%

COVID-19 and investment–cash flow sensitivity: A cross-country analysis

Thai

Mazur

2023

Research in International Business and Finance

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“…companies adjust their cash-holding levels. As an important supplement to the traditional financial service system, digital finance, with the help of big data, cloud computing and other technologies, improves the structure of the traditional financial market and its systems, facilitates the daily transactions of corporate cash holdings in a more accurate, efficient, and convenient way, reduces financial risks, seizes investment opportunities to deliver benefits, and reduces management and opportunity costs [31,32]. Digital transformation of the financial industry improves the financing environment, reduces information asymmetry between subjects, and narrows the gap between internal and external financing costs, and, as a result, firms adjust their cash-holding strategies.…”

Section: Digital Finance and Cash-holding Strategymentioning

confidence: 99%

Digital Finance and Corporate Cash-Holding Strategy: Organizational Heterogeneity and Strategic Transmission Channels

Bao

2023

Sustainability

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This study examined the impact of digital finance on corporate cash holdings and the influence of organizational structure and corporate strategy, using the example of A-share-listed companies in China from 2011 to 2018. The results showed that digital finance significantly reduced the level of cash holdings of listed companies; compared with Group Holding Company Limited, the impact of digital finance on the cash holdings of independent enterprises was more pronounced; and digital finance reduced the degree of strategic radicalization of listed companies, then reduced the level of cash holdings of listed companies. The reliability of the empirical results was validated using the dynamic panel model, instrumental variable analysis, and other sensitivity tests. The findings of the study have implications for the guidance of digital finance development and dynamic adjustment of corporate cash holdings.

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“…, 1999). Therefore, high levels of cash are primarily driven by either the need to cover operating losses or the need to fund investments (Jiang and Wu, 2022).…”

Section: Related Literature and Empirical Predictionmentioning

confidence: 99%

“…Also, the transaction motive emphasizes the cash needed by firms to fund their daily obligations and operating expenses (Baumol, 1952;Opler et al, 1999). Therefore, high levels of cash are primarily driven by either the need to cover operating losses or the need to fund investments (Jiang and Wu, 2022).…”

Section: Research On Cash Holdingmentioning

confidence: 99%

The importance of managerial discretion on managerial ability–firm cash holding nexus

Magerakis

2022

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PurposeThis paper examines the role of managerial discretion in the relation between managerial ability on the level of corporate cash.Design/methodology/approachConjoining the upper echelons theory's premises and the theoretical framework of cash holdings, we posit that the managerial ability's effect on cash policy varies with managerial discretion using firm-level data. To test the empirical prediction, we employ a linear regression model with fixed effects with a sample of US listed firms from 1980 to 2016.FindingsThe findings reveal that the positive association between the ability of chief executive officers and corporate cash savings is weakened by firm-level managerial discretion. The results are robust to various additional analyses, namely lagged independent variables regression, reduced form regression and granger causality test. Overall, the findings are generally consistent with the cash holding motives yielding transaction and precautionary demand for money. However, our findings also shed light on whether managerial discretion moderates or exacerbates agency problems related to top executives' cash holding policies.Originality/valueThis work's distinct characteristic is the investigation of the joint effect of managerial talent and discretion on a firm's cash holding, which remains unexplored in the literature.

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The effects of cash-holding motivation on cash management dynamics

Cited by 9 publications

References 26 publications

COVID-19 and investment–cash flow sensitivity: A cross-country analysis

COVID-19 and investment–cash flow sensitivity: A cross-country analysis

Digital Finance and Corporate Cash-Holding Strategy: Organizational Heterogeneity and Strategic Transmission Channels

The importance of managerial discretion on managerial ability–firm cash holding nexus

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