Do firms park capital? Evidence from the U.S. manufacturing sector

Investment Management & Financial Innovations

Paul Moon Sub Choi¹  Francis Joonsung Won² 

[1] Associate Professor, College of Business Administration, Ewha Womans University;Ph.D. Student, Zicklin School of Business, Baruch College, CUNY;

关键词: agency cost;    cash holdings;    corporate governance;    cost of carry;    motives of cash holdings;    Tobin’s Q;   

DOI  :  10.21511/imfi.15(2).2018.17

来源: DOAJ

【 摘 要 】

This study uses the “cost of carry” (CoC) measure to identify the motive for corporate cash holdings. Based on the historical, moving-average holdings of currency and liquid assets, the measure represents the net opportunity cost of corporate demand for money. This study finds that large manufacturing firms in the U.S. park their capital in short-term assets appealing to the agency motive for cash holdings. Because dividend-paying firms can choose to distribute their capital to equity shareholders when their investment opportunities are unfavorable, these firms might show a non-positive association between capital expenditure and the CoC measure, championing the transactions motive. Still, dividend-paying large firms exhibit an overall positive correlation, suggesting that they park their capital on the agency motive. A detailed literature review and discussions are followed.

【 授权许可】

Unknown