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Stock Liquidity Risk and Cash Preservation

Author

Listed:
  • Shih-Kuo Yeh

    (Department of Finance, National Chung Hsing University, 250 Kuo-Kuang Road, Taichung 402, Taiwan, R. O. C.)

  • Wan-Ru Yang

    (Department of Finance, National University of Kaohsiung, 700, Kaohsiung University Road, Kaohsiung 811, Taiwan, R. O. C.)

  • Ren-Raw Chen

    (Graduate School of Business Administration, Fordham University, Room 1319, 1790 Broadway, New York, NY 10023, USA)

  • Chung-Ying Yeh

    (Department of Finance, National Chung Hsing University, 250 Kuo-Kuang Road, Taichung 402, Taiwan, R. O. C.)

Abstract

This paper investigates the relationship among liquidity risk, cash-holdings, financial constraints, and capital-raising costs. Our results show that cash preservation has different impacts on the liquidity risk explained by different aspects. The liquidity risk is negatively related with cash holdings. More financial constraints increase the liquidity risk. The firms with low capital-raising costs hold more cash because of liquidity needs.

Suggested Citation

  • Shih-Kuo Yeh & Wan-Ru Yang & Ren-Raw Chen & Chung-Ying Yeh, 2022. "Stock Liquidity Risk and Cash Preservation," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 25(04), pages 1-21, December.
    • Handle: RePEc:wsi:rpbfmp:v:25:y:2022:i:04:n:s0219091522500321
    DOI: 10.1142/S0219091522500321
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    More about this item

    Keywords

    Cash holdings; liquidity risk; capital-raising costs; financial constraints;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G19 - Financial Economics - - General Financial Markets - - - Other

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