This appendix is organized as follows. Section A examines our model’s implication for the risk and return on equity, in particular, on how beta changes with the firm’s cash holdings. Section B studies the comparative statics of the stationary cash-capital ratio distributions. Section C calculates the endogenous average financing costs. Section D presents a model that endogenizes the credit line...

We propose a theory of credit lines provided by banks to firms as a form of monitored liquidity insurance. Bank monitoring and resulting revocations help control illiquidityseeking behavior of firms insured by credit lines. The cost of credit lines is thus greater for firms with high liquidity risk, which in turn are likely to use cash instead of credit lines. We test this implication for corpo...

We examine the effects of credit default swaps (CDS), a major type of over-thecounter derivative, on the corporate liquidity management of the reference firms. CDS help firms to access the credit market since the lenders can hedge their credit risk more easily using these contracts. However, CDS-protected creditors can be tougher in debt renegotiations and less willing to support distressed bor...

This paper examines the impact of corporate environmental, social and governance (ESG) disclosure on cash holdings, specifically during various stages firm life cycle S&P 1500 indexed firms. Using a sample 9811 firm-year observations from 2006 to 2015, we document significantly negative relation between ESG holdings in introduction, growth shake-out/decline stages, those lower are associated wi...

L Finitely many growth options 30 L.1 Optimal policy in the waiting period . . . . . . . . . . . . . . . . . . . . . . 31 L.2 Optimal strategy for a firm with a growth option . . . . . . . . . . . . . . . 34 L.3 Proofs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 L.4 Solution to Problem 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 L.5 Solu...

Abstract The aim of the study is to examine impact financial constraints and distress on cash holdings, both in normal crisis times. We collected 4,406 firm-year observations companies listed Warsaw Stock Exchange (WSE). Our research shows that maintain higher holdings during a than period. However, contrast our expectations, with difficulties (constraints distress) have lower originality lies ...

The present study aims to evaluate the relationship between social capital and cash holdings in firms. population under comprises all listed companies on Tehran Stock Exchange. A total of 175 firms (1050 year-firm) were selected from 2014 2020 variables using systematic elimination method. Moreover, moderating role financial reporting quality was also studied. This paper used multivariable line...