This paper investigates whether R&D influences cash holdings differently for multinationals than for domestic companies. Theory suggests that R&D impacts cash holdings positively in general and might do so to a bigger extent for multinationals, mainly because firms can better protect their...

Recently, debate on corporate cash holdings has received greater attention in the corporate finance literature. Corporate finance theories provide competing hypotheses on the relationship between cash holdings and corporate performance. This study empirically examines the relationship between...

This paper distinguishes political uncertainty from policy uncertainty shocks and uncovers new empirical facts about how each impacts the aggregate cash holdings of US firms. Our baseline structural vector autoregression model shows that an exogenous one standard deviation shock to political and...

We examine whether firms hold more cash in the face of tax uncertainty. Because of gray areas in the tax law and aggressive tax avoidance, the total amount of tax that a firm will pay is uncertain at the time it files its returns. The tax authorities can challenge and disallow the firm's tax...

Employment protection increases labor adjustment costs and hence the expected costs of financial distress for labor-intensive firms. It follows that these firms are likely to increase their cash holdings to reduce the risk of financial distress when employment protection is strengthened....

This study empirically analyzes the effects of political corruption on corporate cash holdings policy and the impact of cash holdings on firm performance using 97 multinational data. We find that there is a nonlinear cubic function relationship between the political corruption and corporate cash...

Exploiting reforms of state covenants-not-to-compete laws to capture exogenous variation in barriers to compete for talent, I show that firms increase cash holdings when talent competition intensifies. The effect is concentrated among firms for which talent is more important and in industries...

I estimate a dynamic game where firms make external financing decisions and hold cash taking into account the corresponding behavior of their peers. A key advantage of this approach is that I can obtain an empirical measure of peer effects that stem from decision makers' dynamic optimization...

This research examines the peer effects on cash holdings in Vietnam, an emerging market, and finds a reverse peer effect on them - that is, a firm’s level of cash holdings negatively relates to those of its peers. We also note the reverse peer effects are stronger for firms facing less...

US firm cash holdings have become increasingly concentrated over time withering shareholder returns and heightening agency problems associated with free cash flows. Our use of a robust regression technique (LAD) and a state-of-the-art variable selection procedure (LASSO) to identify the...