Are excess cash holdings more valuable to firms in times of crisis? Financial constraints and governance matters

Chang, Yanhao, Benson, Karen and Faff, Robert (2016) Are excess cash holdings more valuable to firms in times of crisis? Financial constraints and governance matters. Pacific Basin Finance Journal, . doi:10.1016/j.pacfin.2016.05.007


Author Chang, Yanhao
Benson, Karen
Faff, Robert
Title Are excess cash holdings more valuable to firms in times of crisis? Financial constraints and governance matters
Journal name Pacific Basin Finance Journal   Check publisher's open access policy
ISSN 0927-538X
Publication date 2016-05-25
Sub-type Article (original research)
DOI 10.1016/j.pacfin.2016.05.007
Open Access Status Not yet assessed
Total pages 17
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Language eng
Abstract This study examines the impact of cash holdings on firm value before and during the 2008 financial crisis, conditional on financial constraints and corporate governance. We show that the equity market places a higher value on corporate cash holdings during the financial crisis and cash holdings are more valuable to constrained firms, compared to unconstrained firms. However, the triple-interaction of cash with constraints and crisis shows the crisis value effect for constrained firms is weaker than for unconstrained firms. Further, the triple-interaction of excess cash with governance and constraints shows that a positive governance effect on corporate cash holdings is more pronounced for firms that are financially constrained.
Keyword Cash holdings
Corporate governance
Financial constraints
Financial crisis
Firm value
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ
Additional Notes Article in Press. Published online 25 May 2016

Document type: Journal Article
Sub-type: Article (original research)
Collections: HERDC Pre-Audit
UQ Business School Publications
 
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