Firm selection and corporate cash holdings

• 成果类型: Article
• 署名作者: Begenau, Juliane; Palazzo, Berardino
• 署名单位: Stanford University; National Bureau of Economic Research; Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2020.09.001
• 发表日期: 2021
• 页码: 697-718
• 关键词: CASH HOLDINGS; R&D firms; New lists; Firm selection

摘要

Since the early 1980s, the composition of US public firms has progressively shifted toward less profitable firms with high growth potential (Fama and French, 2004). We estimate a dynamic corporate finance model to quantify the role of this selection mechanism for the secular trend in cash holdings among US public firms. We find that an increase in the precautionary savings motive-primarily driven by the decline in initial profitability among R&D-intensive new lists-explains about 50% of the upward trend in cash holdings. This selection mechanism also explains part of the upward trend in sales growth volatility. (C) 2020 Elsevier B.V. All rights reserved.