Why do firms hold so much cash? A tax-based explanation

Preprint OPEN
C. Fritz Foley; Jay C. Hartzell; Sheridan Titman; Garry Twite;
(2006)
  • Subject:
    • jel: jel:F3 | jel:F23 | jel:G32 | jel:H25 | jel:G35

U.S. corporations hold significant amounts of cash on their balance sheets, and these cash holdings have been justified in the existing empirical literature by transaction costs and precautionary motives. An additional explanation, considered in this study, is that U.S.... View more
  • References (24)
    24 references, page 1 of 3

    Almeida, H., Campello, M., Weisbach, M.S., 2004. The cash flow sensitivity of cash. Journal of Finance 59, 1777-1804.

    Bates, T. W, Kahle, K. M., Stulz, R. M., 2006. Why do U.S. firms hold so much more cash than they used to? Unpublished Working Paper 12534, National Bureau of Economic Research, Cambridge, MA.

    Baumol, W. J., 1952. The transactions demand for money: an inventory theoretic approach. Quarterly Journal of Economics 66, 545-556.

    Bebchuck, L. A., Guzman, A. T., 1999. An economic analysis of transnational bankruptcies. Journal of Law and Economics 42, 775-806.

    Blanchard, O., Lopez-de-Silanes, F., Shleifer, A., 1994. What do firms do with cash windfalls? Journal of Financial Economics 36, 337-360.

    Clausing, K. A., 2001. The impact of transfer pricing on intrafirm trade. In: Hines Jr., J. R. (Ed.), International Taxation and Multinational Activity. The University of Chicago Press, Chicago, 173-194.

    Collins, J., Hand, J. R. M., Shackelford, D., 2001. Valuing deferral: the effect of permanently reinvested foreign earnings on stock prices. In: Hines Jr., J. R. (Ed.), International Taxation and Multinational Activity. The University of Chicago Press, Chicago, 143-166.

    Collins, J., Kemsley, D., Lang, M., 1998. Cross-jurisdictional income shifting and earnings valuation. Journal of Accounting Research 36, 209-230.

    Desai, M. A., Foley, C. F., Hines Jr., J. R., 2001. Repatriation taxes and dividend distortions. National Tax Journal 54, 829-851.

    Desai, M. A., Foley, C. F., Hines Jr., J. R., 2003. A multinational perspective on capital structure choice and internal capital markets. Unpublished Working Paper 9715, National Bureau of Economic Research, Cambridge, MA.

  • Metrics
    No metrics available
Share - Bookmark