Uncertainty and the value of cash holdings

Hyun Joong Im; Heungju Park; Gege Zhao

doi:10.1016/j.econlet.2017.03.005

Uncertainty and the value of cash holdings

Hyun Joong Im, Heungju Park, Gege Zhao

School of Business Administration

Research output: Contribution to journal › Article › peer-review

72 Scopus citations

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.

Original language	English
Pages (from-to)	43-48
Number of pages	6
Journal	Economics Letters
Volume	155
DOIs	https://doi.org/10.1016/j.econlet.2017.03.005
State	Published - 1 Jun 2017

Keywords

Agency costs
Cash holdings
Financial constraints
Real options
Uncertainty

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10.1016/j.econlet.2017.03.005

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title = "Uncertainty and the value of cash holdings",

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.",

keywords = "Agency costs, Cash holdings, Financial constraints, Real options, Uncertainty",

author = "Im, {Hyun Joong} and Heungju Park and Gege Zhao",

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AU - Park, Heungju

AU - Zhao, Gege

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N2 - 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.

AB - 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.

KW - Agency costs

KW - Cash holdings

KW - Financial constraints

KW - Real options

KW - Uncertainty

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SN - 0165-1765

VL - 155

SP - 43

EP - 48

JO - Economics Letters

JF - Economics Letters

ER -

Uncertainty and the value of cash holdings

Abstract

Keywords

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