publication . Preprint . Report . Article . 1997

The Determinants and Implications of Corporate Cash Holdings

Opler, T.; Pinkowitz, L.; Rene Stulz; Williamson, R.;
Open Access
  • Published: 01 Oct 1997
Abstract
We examine the determinants and implications of holdings of cash and marketable" securities by publicly traded U.S. firms in the 1971-1994 period. Firms with strong growth" opportunities and riskier cash flows hold relatively high ratios of cash to total assets. Firms" that have the greatest access to the capital markets (e.g. large firms and those with credit" ratings) tend to hold lower ratios of cash to total assets. These results are consistent with the" view that firms hold liquid assets to ensure that they will be able to keep investing when cash" flow is too low relative to planned investment and when outside funds are expensive. The" short run impact of ...
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