Corporate Financial Policy and the Value of Cash
We examine the cross-sectional variation in the marginal value of corporate cash holdings that arises from differences in corporate financial policy. We begin by providing semi-quantitative predictions for the value of an extra dollar of cash depending upon the likely use of that dollar, and derive...
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2006
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sg-smu-ink.lkcsb_research-21492022-02-17T01:04:09Z Corporate Financial Policy and the Value of Cash FAULKENDER, Michael WANG, Rong We examine the cross-sectional variation in the marginal value of corporate cash holdings that arises from differences in corporate financial policy. We begin by providing semi-quantitative predictions for the value of an extra dollar of cash depending upon the likely use of that dollar, and derive a set of intuitive hypotheses to test empirically. By examining the variation in excess stock returns over the fiscal year, we find that the marginal value of cash declines with larger cash holdings, higher leverage, better access to capital markets, and as firms choose greater cash distribution via dividends rather than repurchases. 2006-08-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research/1150 info:doi/10.1111/j.1540-6261.2006.00894.x https://ink.library.smu.edu.sg/context/lkcsb_research/article/2149/viewcontent/WangRongCash72.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University corporate finance cash holdings corporate financial policy Corporate Finance |
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corporate finance cash holdings corporate financial policy Corporate Finance FAULKENDER, Michael WANG, Rong Corporate Financial Policy and the Value of Cash |
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We examine the cross-sectional variation in the marginal value of corporate cash holdings that arises from differences in corporate financial policy. We begin by providing semi-quantitative predictions for the value of an extra dollar of cash depending upon the likely use of that dollar, and derive a set of intuitive hypotheses to test empirically. By examining the variation in excess stock returns over the fiscal year, we find that the marginal value of cash declines with larger cash holdings, higher leverage, better access to capital markets, and as firms choose greater cash distribution via dividends rather than repurchases. |
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FAULKENDER, Michael WANG, Rong |
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FAULKENDER, Michael WANG, Rong |
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FAULKENDER, Michael |
title |
Corporate Financial Policy and the Value of Cash |
title_short |
Corporate Financial Policy and the Value of Cash |
title_full |
Corporate Financial Policy and the Value of Cash |
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Corporate Financial Policy and the Value of Cash |
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Corporate Financial Policy and the Value of Cash |
title_sort |
corporate financial policy and the value of cash |
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Institutional Knowledge at Singapore Management University |
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2006 |
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https://ink.library.smu.edu.sg/lkcsb_research/1150 https://ink.library.smu.edu.sg/context/lkcsb_research/article/2149/viewcontent/WangRongCash72.pdf |
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