TY  - JOUR
AU  - Opler,Tim
AU  - Pinkowitz,Lee
AU  - Stulz,Rene
AU  - Williamson,Rohan
TI  - The Determinants and Implications of Corporate Cash Holdings
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6234
PY  - 1997
Y2  - October 1997
UR  - http://www.nber.org/papers/w6234
L1  - http://www.nber.org/papers/w6234.pdf
N1  - Author contact info:
Rene M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz_1@cob.osu.edu

Rohan Williamson
Georgetown University
Finance Group
McDonough School of Business
587 Hariri Building
Washington, DC 20057
Tel: 202 687 2284
Fax: 202 687 4031
E-Mail: WILLIARG@georgetown.edu
AB  - We examine the determinants and implications of holdings of cash and marketable" securities by publicly traded U.S. firms in the 1971-1994 period. Firms with strong growth" opportunities and riskier cash flows hold relatively high ratios of cash to total assets.  Firms" that have the greatest access to the capital markets (e.g. large firms and those with credit" ratings) tend to hold lower ratios of cash to total assets.  These results are consistent with the" view that firms hold liquid assets to ensure that they will be able to keep investing when cash" flow is too low relative to planned investment and when outside funds are expensive.  The" short run impact of excess cash on capital expenditures, acquisition spending and payouts to" shareholders is small.  The main reason that firms experience large changes in excess cash is" the occurrence of operating losses.  There is no evidence that risk management and cash" holdings are substitutes.
ER  -