Do U.S. Firms Hold More Cash?

Lee Pinkowitz, René Stulz and Rohan Williamson
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Lee Pinkowitz: Georgetown University
Rohan Williamson: Georgetown University

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Using medians, U.S. firms do not hold more cash than similar foreign firms, irrespective of whether the foreign firms come from countries with good investor protection or not. With means, they do. The means, in contrast to the medians, are affected by U.S. multinationals. U.S. multinationals with high R&D expenditures hold 38.7% more cash than comparable foreign firms, but there is evidence that these high cash holdings may result more from high R&D expenditures than from multinationality. The crisis leaves only small traces in the recent cash holdings of firms. Firms throughout the world decreased their cash holdings during the crisis and replenished their cash holdings afterwards as expected with the precautionary motive for cash holdings. However, U.S. firms hold more cash than firms from countries where the stock market fell less during the crisis. There is no evidence that the determinants of cash holdings changed from before the crisis to after the crisis.

JEL-codes: F23 G32 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2014-06

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