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 finding … are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads …

This paper examines how credit risk spillovers affect corporate financial flexibility. We construct separate empirical … proxies to disentangle the two channels of credit risk spillovers—credit risk contagion (CRC), where one firm's default … investment and payout. In contrast, PMR generally has opposite, albeit weaker, effects. Our findings suggest that credit risk …

Intuition suggests that firms with higher cash holdings should be 'safer' and have lower credit spreads. Yet …, spreads are negatively related to the part of cash holdings that is not determined by credit risk factors. Similarly, although …, suggesting that precautionary savings are central to understanding the effects of cash on credit risk …