Financial Strength and Product Market Behavior: The Real Effects of Corporate Cash Holdings

• 成果类型: Article
• 署名作者: Fresard, Laurent
• 署名单位: Hautes Etudes Commerciales (HEC) Paris
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2010.01562.x
• 发表日期: 2010
• 页码: 1097-1122
• 关键词: capital structure; empirical-analysis; FIRMS; industry; debt; INVESTMENT; determinants; performance; governance; OPTION

摘要

This paper shows that large cash reserves lead to systematic future market share gains at the expense of industry rivals. Using shifts in import tariffs to identify exogenous intensification of competition, difference-in-difference estimations support the causal impact of cash on product market performance. Moreover, the analysis reveals that the competitive effect of cash is markedly distinct from the strategic effect of debt on product market outcomes. This effect is stronger when rivals face tighter financing constraints and when the number of interactions between competitors is large. Overall, the results suggest that cash policy encompasses a substantial strategic dimension.