Cash Holdings and Corporate Diversification

• 成果类型: Article
• 署名作者: Duchin, Ran
• 署名单位: University of Michigan System; University of Michigan
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2010.01558.x
• 发表日期: 2010
• 页码: 955-992
• 关键词: internal capital-markets; financial constraints; firms hold; governance; INVESTMENT; FLOW; INFORMATION; discount; credit; return

摘要

This paper studies the relation between corporate liquidity and diversification. The key finding is that multidivision firms hold significantly less cash than stand-alone firms because they are diversified in their investment opportunities. Lower cross-divisional correlations in investment opportunity and higher correlations between investment opportunity and cash flow correspond to lower cash holdings, even after controlling for cash flow volatility. The effects are strongest in financially constrained firms and in well-governed firms, and correspond to efficient fund transfers from low- to high-productivity divisions. Taken together, these results bring forth an efficient link between diversification and corporate liquidity.