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Do firms park capital? Evidence from the U.S. Manufacturing sector

Title
Do firms park capital? Evidence from the U.S. Manufacturing sector
Authors
Choi P.M.S.Won F.J.
Ewha Authors
최문섭
SCOPUS Author ID
최문섭scopus
Issue Date
2018
Journal Title
Investment Management and Financial Innovations
ISSN
1810-4967JCR Link
Citation
Investment Management and Financial Innovations vol. 15, no. 2, pp. 194 - 202
Keywords
Agency costCash holdingsCorporate governanceCost of carryMotives of cash holdingsTobin’s Q
Publisher
LLC CPC Business Perspectives
Indexed
SCOPUS scopus
Document Type
Article
Abstract
This study uses the “cost of carry” (CoC) measure to identify the motive for corporate cash holdings. Based on the historical, moving-average holdings of currency and liquid assets, the measure represents the net opportunity cost of corporate demand for money. This study finds that large manufacturing firms in the U.S. park their capital in short-term assets appealing to the agency motive for cash holdings. Because dividend-paying firms can choose to distribute their capital to equity shareholders when their investment opportunities are unfavorable, these firms might show a non-positive association between capital expenditure and the CoC measure, championing the transactions motive. Still, dividend-paying large firms exhibit an overall positive correlation, suggesting that they park their capital on the agency motive. A detailed literature review and discussions are followed. © Paul Moon Sub Choi, Francis Joonsung Won, 2018.
DOI
10.21511/imfi.15(2).2018.17
Appears in Collections:
경영대학 > 경영학전공 > Journal papers
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