TY - JOUR
T1 - Organization capital and corporate cash holdings
AU - Marwick, Alex
AU - Hasan, Mostafa Monzur
AU - Luo, Tianpei
PY - 2020/3/1
Y1 - 2020/3/1
N2 - This paper investigates the relationship between organization capital and corporate cash holdings. We develop two competing hypotheses in relating organization capital with cash holding. Our analysis reveals that organization capital is related to high levels of cash holdings. Moreover, we find that the effect of organization capital on corporate cash holdings is stronger for firms experiencing high levels of financing constraint and cash flow risk. Our results remain robust to alternative measures of organization capital and corporate cash holdings, and are not driven by omitted variable bias or endogeneity issues. We also find that the positive relation between organization capital and cash holdings is not confounded by sample period or industry group. Overall, we provide robust evidence that supports the precautionary motive for corporate cash holding.
AB - This paper investigates the relationship between organization capital and corporate cash holdings. We develop two competing hypotheses in relating organization capital with cash holding. Our analysis reveals that organization capital is related to high levels of cash holdings. Moreover, we find that the effect of organization capital on corporate cash holdings is stronger for firms experiencing high levels of financing constraint and cash flow risk. Our results remain robust to alternative measures of organization capital and corporate cash holdings, and are not driven by omitted variable bias or endogeneity issues. We also find that the positive relation between organization capital and cash holdings is not confounded by sample period or industry group. Overall, we provide robust evidence that supports the precautionary motive for corporate cash holding.
KW - Cash holdings
KW - Organization capital
UR - http://www.scopus.com/inward/record.url?scp=85078761385&partnerID=8YFLogxK
U2 - 10.1016/j.irfa.2020.101458
DO - 10.1016/j.irfa.2020.101458
M3 - Article
AN - SCOPUS:85078761385
SN - 1057-5219
VL - 68
JO - International Review of Financial Analysis
JF - International Review of Financial Analysis
M1 - 101458
ER -