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Management Views on Corporate Cash Holdings

Author

Listed:
  • Gary E. Powell

    (McColl School of Business, Queens University of Charlotte)

  • H. Kent Baker

    (Kogod School of Business, American University)

Abstract

We survey the CFOs of 1,000 large U.S. companies to learn their views about corporate cash holdings. Specifically, we investigate managerial views about the determinants of cash holdings and whether they believe that corporate governance affects a firm’s level of cash holdings, spending of cash, and value of cash holdings. We find their views provide support for an optimal tradeoff approach to cash holdings, limited support for a financing hierarchy explanation, mixed support for arguments that financial constraints affect a firm’s cash holdings, and generally no support for most agency cost explanations. The survey results show that managers believe the effectiveness of a firm’s corporate governance structures may affect its cash holdings and spending of cash but not the value of its cash holdings.

Suggested Citation

  • Gary E. Powell & H. Kent Baker, 2010. "Management Views on Corporate Cash Holdings," Discussion Paper Series 2010-01, McColl School of Business, Queens University of Charlotte.
    • Handle: RePEc:msb:wpaper:2010-01
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    References listed on IDEAS

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    Cited by:

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    2. 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.
    3. Orens, Raf & Reheul, Anne-Mie, 2013. "Do CEO demographics explain cash holdings in SMEs?," European Management Journal, Elsevier, vol. 31(6), pages 549-563.
    4. Mustapher Faque, 2021. "Cash management strategies and firm financial performance: A comprehensive literature review," Bussecon Review of Social Sciences (2687-2285), Bussecon International Academy, vol. 3(4), pages 23-30, October.
    5. Subba Reddy Yarram, 2012. "Corporate Governance, Cash holdings and Value of a Firm: Evidence from Australian Firms," Information Management and Business Review, AMH International, vol. 4(12), pages 606-614.

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    Keywords

    Cash Holdings; Corporate Governance;

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