After a market panic: cash is king
| العنوان: | After a market panic: cash is king |
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| المؤلفون: | Garrett C. Smith |
| المصدر: | Managerial Finance. 40:506-534 |
| بيانات النشر: | Emerald, 2014. |
| سنة النشر: | 2014 |
| مصطلحات موضوعية: | Operating cash flow, Financial economics, Cash and cash equivalents, Economics, Business, Management and Accounting (miscellaneous), Cash flow statement, Cash on cash return, Price/cash flow ratio, Cash management, Cash flow forecasting, Finance, Cash is king |
| الوصف: | Purpose – The purpose of this paper is to examine the effects of financial flexibility as represented by excess cash holdings and debt capacity upon firm returns after periods of high market uncertainty. Design/methodology/approach – Days of high uncertainty are identified from 1987-2011 using the VXO Index (implied volatility of the S&P 100) yielding approximately 45,000 firm events. The main variables of interest are excess cash (Duchin et al., 2010) and debt capacity. Two financial constraint indexes are used as controls in a cross-sectional OLS regression. Findings – The precautionary value of cash during and after times of uncertainty is beneficial. A positive relationship exists for periods of up to two years following the initial day of high uncertainty. Positive BHRs exist on a zero-cost trade investing in a portfolio of high excess cash firms and shorting a portfolio of cash constrained firms. The value of excess debt capacity, on the other hand, is harder to discern; positive profits are obtainable on a zero-cost trade while regression estimates are typically insignificant on average. Originality/value – This paper expands the financial flexibility literature by testing the effects of financial flexibility on returns following days of high market uncertainty. |
| تدمد: | 0307-4358 1987-2011 |
| DOI: | 10.1108/mf-07-2013-0166 |
| URL الوصول: | https://explore.openaire.eu/search/publication?articleId=doi_________::60a894d5b790e2e12a1907676dee42ca https://doi.org/10.1108/mf-07-2013-0166 |
| Rights: | CLOSED |
| رقم الانضمام: | edsair.doi...........60a894d5b790e2e12a1907676dee42ca |
| قاعدة البيانات: | OpenAIRE |
| تدمد: | 03074358 19872011 |
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| DOI: | 10.1108/mf-07-2013-0166 |