Uncertainty and the Value of Cash Holdings-Peking University HSBC Business School(PHBS)

Uncertainty and the Value of Cash Holdings

2017-06-01 08:58:00

by Hyun Joong Im, Heungju Park, and Gege Zhao

ARTICLE | Economics Letters | Vol. 155, 2017

Abstract

We find that a firm facing higher uncertainty has a higher value of cash. This effect is attributed to the increased value of the option to wait and see as well as the aggravated financial constraints and mitigated agency conflicts.

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