Stock Liquidity Risk and Cash Preservation

Shih-Kuo Yeh (), Wan-Ru Yang, Ren-Raw Chen () and Chung-Ying Yeh ()
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Shih-Kuo Yeh: Department of Finance, National Chung Hsing University, 250 Kuo-Kuang Road, Taichung 402, Taiwan, R. O. C.
Wan-Ru Yang: Department of Finance, National University of Kaohsiung, 700, Kaohsiung University Road, Kaohsiung 811, Taiwan, R. O. C.
Ren-Raw Chen: Graduate School of Business Administration, Fordham University, Room 1319, 1790 Broadway, New York, NY 10023, USA
Chung-Ying Yeh: Department of Finance, National Chung Hsing University, 250 Kuo-Kuang Road, Taichung 402, Taiwan, R. O. C.

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2022, vol. 25, issue 04, 1-21

Abstract: This paper investigates the relationship among liquidity risk, cash-holdings, financial constraints, and capital-raising costs. Our results show that cash preservation has different impacts on the liquidity risk explained by different aspects. The liquidity risk is negatively related with cash holdings. More financial constraints increase the liquidity risk. The firms with low capital-raising costs hold more cash because of liquidity needs.

Keywords: Cash holdings; liquidity risk; capital-raising costs; financial constraints (search for similar items in EconPapers)
JEL-codes: G10 G19 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S0219091522500321

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