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Asset tangibility, cash holdings, and financial development

Jin Lei, Jiaping Qiu and Chi Wan

Journal of Corporate Finance, 2018, vol. 50, issue C, 223-242

Abstract: Rising intangible assets on corporate balance sheets around the world could limit borrowing capacity and consequently hinder growth if firms must preserve cash and forgo investment opportunities. We show that financial development lowers the sensitivity of cash holdings to tangible assets and promotes firm growth. We also find that sectors with a smaller proportion of tangible assets grow faster in countries with more developed financial markets. Our analysis reveals an important asset tangibility channel through which financial development facilitates firm growth.

Keywords: Asset tangibility; Cash holdings; Investments; Financial development; Economic growth (search for similar items in EconPapers)
JEL-codes: G21 G32 O43 (search for similar items in EconPapers)
Date: 2018
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