The effect of stock liquidity on cash holdings: The repurchase motive

• 成果类型: Article
• 署名作者: Nyborg, Kjell G.; Wang, Zexi
• 署名单位: University of Zurich; Swiss Finance Institute (SFI); Centre for Economic Policy Research - UK; Lancaster University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.05.027
• 发表日期: 2021
• 页码: 905-927
• 关键词: CORPORATE CASH HOLDINGS; STOCK LIQUIDITY; REPURCHASES; credit lines

摘要

Enhanced stock liquidity increases a firm's propensity to hold cash. This is surprising given the view that improved stock liquidity reduces financial constraints. We propose that firms have a repurchase motive for holding cash. Higher stock liquidity strengthens this incentive. Consistent with this, firms with more liquid stock increase cash holdings relatively more when restrictions to repurchases are eased. The effect of stock liquidity on cash holdings is not influenced by access to credit markets. Our findings suggest that the repurchase motive dominates the real investments motive with respect to the effect of stock liquidity on cash holdings. (c) 2021 Elsevier B.V. All rights reserved.