초록 열기/닫기 버튼
We try to investigate what determines cash holdings of firms on one hand, and if corporate cash holding is beneficial to market evaluation of firms on the other. We document that higher-valued firms hold significantly less cash, loan (bond) is significantly and negatively (positively) associated with cash holdings, and that more foreign share is associated with higher firm value. Determinants of firm value are tested in turn, especially with a concern on corporate cash holding. We document that cash holding is negatively and significantly related to firm value, which is concordant with Jensen's (1986) free cash flow hypothesis. This result is differentiated when the sample is divided according to the degree of leverage: in more (less) levered group, more cash is beneficial (adversary) to firm value. It seems it conforms to liquidity hypothesis, which suggests that in a situation where liquidity is scarce in the market keeping more liquidity is a helpful corporate strategy.
