Uncertainty and the value of cash holdings

Hyun Joong Im, Heungju Park, Gege Zhao

Research output: Contribution to journalArticlepeer-review

64 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 languageEnglish
Pages (from-to)43-48
Number of pages6
JournalEconomics Letters
Volume155
DOIs
StatePublished - 1 Jun 2017

Keywords

  • Agency costs
  • Cash holdings
  • Financial constraints
  • Real options
  • Uncertainty

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