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Uncertainty determinants of corporate liquidity Author info | Abstract | Publisher info | Download info | Related research | Statistics Baum, Christopher F.
Caglayan, Mustafa
Stephan, Andreas
Talavera, Oleksandr
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This paper investigates the link between the optimal level of non-financial firms' liquid assets and uncertainty. We develop a partial equilibrium model of precautionary demand for liquid assets showing that firms alter their liquidity ratio in response to changes in either macroeconomic or idiosyncratic uncertainty. We test this hypothesis using a panel of non-financial US firms drawn from the COMPUSTAT quarterly database covering the period 1993-2002. The results indicate that firms increase their liquidity ratios when macroeconomic uncertainty or idiosyncratic uncertainty increases.
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Article provided by Elsevier in its journal Economic Modelling .
Volume (Year): 25 (2008)
Issue (Month): 5 (September)
Pages: 833-849
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Handle: RePEc:eee:ecmode:v:25:y:2008:i:5:p:833-849Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411
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Paper Christopher F. Baum & Mustafa Caglayan & Andreas Stephan & Oleksandr Talavera, 2006.
"Uncertainty Determinants of Corporate Liquidity ,"
Working Papers
2006_1, Department of Economics, University of Glasgow.
[Downloadable!] Christopher F. Baum & Mustafa Caglayan & Andreas Stephan & Oleksandr Talavera, 2006.
"Uncertainty Determinants of Corporate Liquidity ,"
Discussion Papers of DIW Berlin
633, DIW Berlin, German Institute for Economic Research.
[Downloadable!] Oleksandr Talavera & Christopher Baum & Mustafa Caglayan & Andreas Stephan, 2005.
"Uncertainty Determinants of Corporate Liquidity ,"
Money Macro and Finance (MMF) Research Group Conference 2005
73, Money Macro and Finance Research Group.
[Downloadable!] Christopher F. Baum & Mustafa Caglayan & Andreas Stephan & Oleksandr Talavera, 2005.
"Uncertainty Determinants of Corporate Liquidity ,"
Boston College Working Papers in Economics
634, Boston College Department of Economics, revised 09 Oct 2006.
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Christopher F Baum & Mustafa Caglayan & Oleksandr Talavera, 2009.
"Corporate Liquidity Management and Future Investment Expenditures ,"
Boston College Working Papers in Economics
712, Boston College Department of Economics.
[Downloadable!]
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