This paper empirically analyzes the relationship between firms' competitive position and cash holdings. Firms with a low competitive position have a lower expected cash ow. Therefore, such firms set aside cash from cash flows to avoid default. We estimate a linear cash demand function using two...

High labor compensation increases a firm's risk because of its large size and inflexibility. Utilizing the confidential Establishment Survey data in Japan, we find that labor is positively associated with cash holdings, {ceteris paribus only in the small-size firms subsample, the firms with less...