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Publication Detailed Description
Cash holdings: International evidence
Journal Title
The Journal of Economic Asymmetries
Year (definitive publication)
2022
Language
English
Country
Netherlands
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Abstract
The goal of this paper is to study how firms’ cash holdings have recently performed. We have not
only used GMM approach, but also a pioneer econometric approach to evaluate the determinants
of firms’ cash holdings, ML-SEM. The results are more robust in comparison with those obtained
using GMM. Our results showed that cash holdings have increased during the 2008 financial crisis
and rose significantly after that time. The exception were firms placed in the United States and
emerging markets. We have found that cash holdings, in general, were positively influenced by
the banking system and capital market, although the results have been more robust for the first
variable. Our results also showed that the development of the rule of law and shareholder rights
lead to a decrease on firms’ cash holdings, which confirms the agency theory as an explanation of
firms’ cash holdings.
Acknowledgements
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Keywords
Financial crisis,Capital market development,Domestic credit
Fields of Science and Technology Classification
- Economics and Business - Social Sciences
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