We examine the determinants and implications of holdings of cash and marketable" securities by publicly traded U.S. firms in the 1971-1994 period. Firms with strong growth" opportunities and riskier cash flows hold relatively high ratios of cash to total assets. Firms" that have the greatest...

This paper considers the optimal design of capital budgeting rules when the firm's capital budgeting process involves the interaction of top executives, with private information and stakeholders (e.g., employees) whose motivation and efforts affect the likelihood of the firm's success. In this...