Corporate Liquidity Management: A Conceptual Framework and Survey

Heitor Almeida (), Murillo Campello (), Igor Cunha () and Michael Weisbach
Additional contact information
Heitor Almeida: College of Business, University of Illinois, Champaign, Illinois 61820
Murillo Campello: National Bureau of Economic Research, Cambridge, Massachusetts 02138
Igor Cunha: Nova School of Business and Economics, Lisbon, Portugal 1099-032

Annual Review of Financial Economics, 2014, vol. 6, issue 1, 135-162

Abstract: Ensuring that a firm has sufficient liquidity to finance valuable projects that occur in the future is at the heart of the practice of financial management. However, although discussion of these issues goes back at least to Keynes (1936), a substantial literature on the ways in which firms manage liquidity has developed only recently. We argue that many of the key issues in liquidity management can be understood through the lens of a framework in which firms face financial constraints and wish to ensure efficient investment in the future. We present such a model and use it to survey many of the empirical findings on liquidity management. In addition, we discuss agency-based theories of liquidity, the real effects of liquidity choices, and the impact of the 2008–2009 Financial Crisis on firms’ liquidity management.

Keywords: liquidity; cash; financial constraints; financial crisis (search for similar items in EconPapers)
JEL-codes: G31 G32 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (90)

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Related works:
Working Paper: Corporate Liquidity Management: A Conceptual Framework and Survey (2013)
Working Paper: Corporate Liquidity Management: A Conceptual Framework and Survey (2013)
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