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http://hdl.handle.net/1942/18188
Title: | Why do firms save cash from cash flows? Evidence from firm-level estimation of cash-cash flow sensitivities | Authors: | D'ESPALLIER, Bert HUYBRECHTS, Jolien SCHOUBBEN, Frederiek |
Issue Date: | 2014 | Publisher: | WILEY-BLACKWELL | Source: | ACCOUNTING AND FINANCE, 54 (4), p. 1125-1156 | Abstract: | We construct firm-level estimates for the cash flow sensitivity of cash (CCFS) by modelling heterogeneous slopes in reduced-form cash equations. This approach allows identifying firms with a high, low or even negative savings propensity. We find that high CCFS firms have higher income variation, suggesting cash buffering is triggered by income shocks. High CCFS firms do not suffer from financing constraints measured by a wide selection of indicators. Our results suggest that the CCFS is not an adequate indicator to capture financing constraints. Rather, a higher CCFS indicates smoothing of income fluctuations by installing a cash buffer that successfully prevents future income shortfall. | Notes: | [D'Espallier, Bert] Univ Brussel, Hogesch, Brussels, Belgium. [D'Espallier, Bert] Katholieke Univ Leuven, Brussels, Belgium. [Huybrechts, Jolien] Hasselt Univ, Hasselt, Belgium. [Schoubben, Frederiek] Lessius Univ Coll, Leuven, Belgium. [Schoubben, Frederiek] Katholieke Univ Leuven, Leuven, Belgium. | Keywords: | Cash holdings; Cash-cash flow sensitivities; Firm-level estimation; Bayesian estimation;cash holdings; cash-cash flow sensitivities; firm-level estimation; Bayesian estimation | Document URI: | http://hdl.handle.net/1942/18188 | ISSN: | 0810-5391 | e-ISSN: | 1467-629X | DOI: | 10.1111/acfi.12027 | ISI #: | 000346490100004 | Rights: | © 2013 AFAANZ. | Category: | A1 | Type: | Journal Contribution | Validations: | ecoom 2016 |
Appears in Collections: | Research publications |
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