Stock liquidity and corporate cash holdings

Yi Hu, Yong Li and Jianyu Zeng

Finance Research Letters, 2019, vol. 28, issue C, 416-422

Abstract: This paper investigates the effects of stock liquidity on corporate cash holdings in the U.S. We show that firms with liquid stocks hold less cash after controlling for several firm characteristics, industry and year fixed effects. To mitigate endogenous concerns, we further employ decimalization in the U.S. stock market as an exogenous shock and find the increase in stock liquidity causes firms to reduce cash holdings.

Keywords: Stock liquidity; Cash holdings; Decimalization (search for similar items in EconPapers)
JEL-codes: C90 G32 G34 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:28:y:2019:i:c:p:416-422

DOI: 10.1016/j.frl.2018.06.018

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