Acharya, Viral V.; Davydenko, Sergei A.; Strebulaev, Ilya A. - 2011
"Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet … empirically, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling … reserves are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast …