Financial distress and value of cash holdings: evidence from the Korean stock market

Haeyoung Ryu and Hyunjung Choi

Applied Economics Letters, 2023, vol. 30, issue 13, 1833-1837

Abstract: This study examines how investors in capital markets evaluate the levels of cash held by financially distressed companies. Facing financial hardship, managers first lower the bankruptcy risk by reducing internal capital outflows and securing liquidity. This increases the value of the business, as investors place a higher value on financially distressed companies that hold cash than on those that do not. Empirical results using the Korean stock market show that the higher the level of financial risk, the higher the value of cash holdings. The results of this study suggest that when in financial risk, a company must have sufficient cash for a high corporate valuation.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2022.2083550 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:30:y:2023:i:13:p:1833-1837

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2022.2083550

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().