 Corporate cash and the Firm's life-cycle: Evidence from dual-class firmsJames Juichia Lin, Wei-Zhong Shi, Li-Fang Tsai and Min-Teh Yu () International Review of Economics & Finance, 2022, vol. 80, issue C, 27-48 Abstract: This research explores whether a dual-class ownership structure affects a firm's propensity to stockpile cash reserves over the life cycle stages. Using a sample of U.S. dual-class firms, evidence shows that the cash holdings of dual-class firms are significantly lower than that of single-class firms by 2.42%. The dual-class firms that exploit external debt financing deploy more cash for acquisition activities. More importantly, dual-class firms decrease their cash holdings by only 2.8% when growing from young to mature, while single-class firms decrease that by 5.88%. During the mature stage, the dual-class firms experience a larger fall in operating net cash flow, cash acquisition expenditure, and debt financing than do single-class firms. These findings, however, are only significant for firms with high information asymmetry. Our evidence of changes in cash holdings shows that agency costs associated with dual-class ownership increase over the life cycle. Keywords: Dual-class ownership; Cash holdings; Life cycle; Voting rights; Agency cost (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:80:y:2022:i:c:p:27-48 DOI: 10.1016/j.iref.2022.02.006 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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