Excess cash, financial constraints, and the diversification discount.

摘要

This study examines the characteristics of corporate cash holdings and how the interaction between internal and external financial markets affects firm value. The research first determines if there are temporal and industry determinants of cash holdings, and finds that cash holdings are mean-reverting, and that the firm's industry is a key determinant of the firm's cash holdings. The study then examines other determinants of cash holdings, including financial constraints and diversification. The results show that financing constraints and diversification are also determinants of cash holdings, and that the interaction of excess cash holdings, financial constraints, and diversification affect firm value and corporate investment.