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Cash Holdings, Working Capital and Firm Value: Evidence from France

Ruta Autukaite and Eric Molay
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Ruta Autukaite: EDHEC Nice
Eric Molay: Université de Nice Sophia-Antipolis

Bankers, Markets & Investors, 2014, issue 132, 53-62

Abstract: The importance of short-term financial decisions to a company’s value is considered in this paper by testing whether an extra euro invested in cash or in net working capital is valued at less than one euro. By running panel data regressions, the presented evidence proves that shareholders undervalue cash holdings and net working capital. The results of this paper alert management not to underestimate the importance of cash holdings and working capital management; moreover, the results encourage investors to follow a company’s actions in this area to maximise their returns on investment.

Keywords: Cash Holdings; Profitability; Stock Return; Working Capital (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2014
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