Cash Holdings, Firm Value and the Role of Market Imperfections. A Cross Country Analysis

Giorgio Calcagnini, Adam Gehr () and Germana Giombini
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Adam Gehr: DePaul University

Chapter Chapter 3 in The Economics of Imperfect Markets, 2010, pp 51-71 from Springer

Abstract: Abstract In this paper we evaluate the empirical importance of the contemporaneous presence of financial and labor market imperfections by studying cross-country differences in market valuations of listed companies and firms’ cash holdings. Our results show that, as expected, financial market imperfections are positively correlated with firms’ cash holdings and that the latter are larger wherever employment protection laws (EPL) are stricter. Moreover, stock markets value liquid companies less in economies with higher EPL levels.

Keywords: Cash Flow; Financial Distress; Cash Holding; Liquid Asset; Employment Protection Legislation (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-7908-2131-4_3

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DOI: 10.1007/978-3-7908-2131-4_3

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