A transaction cost perspective on why, how, and when cash impacts firm performance

Jonathan O'Brien and Timothy Folta
Additional contact information
Jonathan O'Brien: RPI - Rensselaer Polytechnic Institute
Timothy Folta: EM - EMLyon Business School, Purdue University [West Lafayette]

Post-Print from HAL

Abstract: While both financial and behavioral theories suggest that cash holdings may be beneficial to R&D-intensive firms, agency theory would suggest that strong monitoring may be needed to ensure that cash holdings are not squandered. We contend that transaction cost economics provides a valuable lens for understanding the performance implications of cash holdings because not only does it explicate the benefits and costs of cash holdings in a single unified theoretical framework, but it further clarifies how environmental uncertainty critically moderates these relationships. Empirical tests on a large sample of US corporations yield strong support for our theory.

Date: 2009-10-01
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Published in Managerial and Decision Economics, 2009, 30 (7), 465-479 p. ⟨10.1002/mde.1457⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02311826

DOI: 10.1002/mde.1457

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().