The joint determinants of cash holdings and debt maturity: the case for financial constraints

摘要

We examine the joint choices of cash holdings and debt maturity for a large sample of firms for the 1985-2013 period. We find that there is a positive relation between debt maturity and cash holdings. Our results hold after taking into account endogeneity among leverage, debt maturity, and cash holding. We posit that this positive relationship will be found among firms facing financial constraints and we find support for this hypothesis. Our results are robust after we control for agency problems, international taxation, bank loan liquidity covenants and default risk.