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Technology spillovers and corporate cash holdings

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  • Qiu, Jiaping
  • Wan, Chi

Abstract

This study examines the effect of technology spillovers on firms׳ cash holdings. It finds that firms facing greater technology spillovers hold higher cash balances. This effect is more pronounced among financially constrained firms and for firms that are likely to benefit more from diffused technology, e.g., those that have newer patents, are more profitable, and face better growth opportunities. The spillover impact remains strong when product market competition and own-firm innovations are accounted for. Overall, our study identifies technology spillovers as an important factor in determining corporate cash policy.

Suggested Citation

  • Qiu, Jiaping & Wan, Chi, 2015. "Technology spillovers and corporate cash holdings," Journal of Financial Economics, Elsevier, vol. 115(3), pages 558-573.
    • Handle: RePEc:eee:jfinec:v:115:y:2015:i:3:p:558-573
    DOI: 10.1016/j.jfineco.2014.10.005
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    More about this item

    Keywords

    Technology spillovers; Product market competition; Cash holdings;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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