NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Kristine Hankins

University of Kentucky
Lexington, KY 40506

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NBER Working Papers and Publications

September 2017Understanding the Rise in Corporate Cash: Precautionary Savings or Foreign Taxes
with Michael W. Faulkender, Mitchell A. Petersen: w23799
What has driven the dramatic rise in U.S. corporate cash? Using non-public data, we show that the run-up is not uniform across firms and is greatest in the foreign subsidiaries of multinational firms. Standard precautionary motives explain only domestic cash holdings, not the burgeoning foreign cash balances. Falling foreign tax rates, coupled with relaxed restrictions on income shifting, are the root of the changing foreign cash patterns. IP intensive firms have the greatest ability to shift income to low tax jurisdictions, and their foreign subsidiaries are where we observe the largest accumulations of cash.
April 2017Risk Management with Supply Contracts
with Heitor Almeida, Ryan Williams: w23331
Purchase obligations are forward contracts with suppliers and are used more broadly than traded commodity derivatives. This paper is the first to document that these contracts are a risk management tool and have a material impact on corporate hedging activity. Firms that expand their risk management options following the introduction of steel futures contracts substitute financial hedging for purchase obligations. Contracting frictions – such as bargaining power and settlement risk – as well as potential hold-up issues associated with relationship-specific investment affects the use of purchase obligations in the cross-section as well as how firms respond to the introduction of steel futures.

Published: Heitor Almeida & Kristine Watson Hankins & Ryan Williams, 2017. "Risk Management with Supply Contracts," The Review of Financial Studies, vol 30(12), pages 4179-4215.

 
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