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Research Note: Cash Holding and Firm Value: The Case of Taiwan's Tourism Industry

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  • Shr-Wei Kao

    (Department of Business Administration, National Taiwan University of Science and Technology, and Chunghwa Telecom Foundation, 1F, No 21-3, Sec 1, Sinyi Road, Jhongjheng District, Taipei City, 100 Taiwan, ROC)

Abstract

This paper examines whether the percentage of cash holdings affects firm value in the tourism industry in Taiwan. Before the percentage of cash holdings reaches the threshold value, an increase in after-tax earnings boosts the firm's value. However, when the percentage of the cash holdings exceeds the threshold value, an increase in after-tax earnings decreases the firm's value. There is a non-linear relationship between after-tax earnings and firm value and between interest expenses and firm value. There are also smooth transition effects.

Suggested Citation

  • Shr-Wei Kao, 2012. "Research Note: Cash Holding and Firm Value: The Case of Taiwan's Tourism Industry," Tourism Economics, , vol. 18(4), pages 897-902, August.
    • Handle: RePEc:sae:toueco:v:18:y:2012:i:4:p:897-902
    DOI: 10.5367/te.2012.0150
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    References listed on IDEAS

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    4. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
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    Cited by:

    1. Mostafa Monzur Hasan & Ahsan Habib & Ruoyun Zhao, 2022. "Corporate reputation risk and cash holdings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 667-707, March.
    2. repec:mth:ijafr8:v:9:y:2019:i:1:p:245-256 is not listed on IDEAS

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