Is There a U.S. High Cash Holdings Puzzle after the Financial Crisis?

Lee Pinkowitz, René Stulz and Rohan Williamson
Additional contact information
Lee Pinkowitz: Georgetown University
Rohan Williamson: Georgetown University

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Defining normal cash holdings as the holdings a firm with the same characteristics would have had in the late 1990s, we find that the average abnormal cash holdings of U.S. firms after the financial crisis amount to 10% of cash holdings, which represents an 87% increase in abnormal cash holdings from before the crisis. The increase in abnormal cash holdings of U.S. firms is concentrated among highly profitable firms. Strikingly, abnormal cash holdings do not increase more for U.S. firms than for firms in advanced countries from before the crisis to after the crisis. Though abnormal cash holdings of U.S. multinational firms increase sharply in the early 2000s while cash holdings of purely domestic firms do not, there is no increase in abnormal cash holdings by U.S. multinational firms from before the crisis to after. Further evidence shows that the tax explanation for the cash holdings of U.S. multinational firms cannot explain the large abnormal holdings of these firms. In sum, while the high cash holdings of U.S. firms before the crisis are a U.S.-specific puzzle, the increase in cash holdings of U.S. firms from before the crisis to after is not.

JEL-codes: F23 G32 (search for similar items in EconPapers)
Date: 2013-04
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID22 ... ctid=2253943&mirid=1

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:ecl:ohidic:2013-07

Access Statistics for this paper

More papers in Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().