We evaluate the link between CEO industry tournament incentives (ITI) and the product market benefits of corporate liquidity. We find that ITI increase the level and marginal value of cash holdings. Furthermore, ITI strengthen the relation between excess cash and market share gains especially...

Using a quasi-natural experiment and various measures of competition intensity, we examine whether an increase in product market competition is a key driver of firm cash holdings. We find that firms increase cash holdings when competition is intense. We also evaluate if changes in cash holdings...