 Why do French firms hold cash?Khaoula Saddour ()
Post-Print from HAL Abstract: This paper investigates the determinants of the cash holdings of French firms over the period 1998- 2002, using the trade-off theory and the pecking order theory. We show that French firms increase their cash level when their activities are risky and the levels of their cash flow are high, and reduce it when they are highly leveraged. Growth companies hold higher cash levels than mature companies. For growth companies, there is a negative relation between cash and the following firm's characteristics: size, level of liquid assets and short-term debt. The cash level of mature companies increases with their size, their investment level, and the payout to their shareholders in the form of dividends or stock repurchases, and decreases with their trade credit and their expenses on research and development. Further results indicate that the firm's market value as measured by Tobin's Q increases with its cash level. This positive relation is stronger for growth companies than for mature companies. Keywords: Cash holdings; growth opportunities; firm market value (search for similar items in EconPapers) Published in Conférence Internationale en Finance de l'AFFI, 2006, Poitiers, France There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00151953 Access Statistics for this paper More papers in Post-Print from HAL |
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