The Effects of Liquidity Shocks on Corporate Investments and Cash Holdings: Evidence from Actuarial Pension Gains/Losses
Financial Management, 2015, vol. 44, issue 3, 685-707
type="main"> This paper investigates how anticipated liquidity shocks affect corporate investment and cash holdings by examining the impacts of actuarial pension gains/losses that do not reduce current internal resources but will reduce those available in the future. Using a sample from Japanese manufacturing firms in which pension deficits had a huge impact on the internal resources of sponsoring firms, I show that pension losses significantly decrease the capital expenditures of sponsoring firms. Pension losses also increase corporate cash holdings, suggesting precautionary demands for cash prepared for future pension contributions. Overall, the results indicate that managers consider anticipated liquidity shocks in determining current investment and cash-saving policies.
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:finmgt:v:44:y:2015:i:3:p:685-707
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0046-3892
Access Statistics for this article
Financial Management is currently edited by William G. Christie
More articles in Financial Management from Financial Management Association International Contact information at EDIRC.
Series data maintained by Wiley-Blackwell Digital Licensing ().