Refinancing Risk and Cash Holdings

• 成果类型: Article
• 署名作者: Harford, Jarrad; Klasa, Sandy; Maxwell, William F.
• 署名单位: University of Washington; University of Washington Seattle; University of Arizona; Southern Methodist University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12133
• 发表日期: 2014
• 页码: 975-1012
• 关键词: Debt Maturity structure; corporate-debt; capital structure; liquidity risk; GROWTH OPPORTUNITIES; AGENCY COSTS; determinants; INVESTMENT; governance; credit

摘要

We find that firms mitigate refinancing risk by increasing their cash holdings and saving cash from cash flows. The maturity of firms' long-term debt has shortened markedly, and this shortening explains a large fraction of the increase in cash holdings over time. Consistent with the inference that cash reserves are particularly valuable for firms with refinancing risk, we document that the value of these reserves is higher for such firms and that they mitigate underinvestment problems. Our findings imply that refinancing risk is a key determinant of cash holdings and highlight the interdependence of a firm's financial policy decisions.