Document Server@UHasselt >
Research >
Research publications >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/18188

Title: Why do firms save cash from cash flows? Evidence from firm-level estimation of cash-cash flow sensitivities
Authors: D'ESPALLIER, Bert
Schoubben, Frederiek
Issue Date: 2014
Citation: ACCOUNTING AND FINANCE, 54 (4), p. 1125-1156
Abstract: We construct firm-level estimates for the cash flow sensitivity of cash (CCFS) by modelling heterogeneous slopes in reduced-form cash equations. This approach allows identifying firms with a high, low or even negative savings propensity. We find that high CCFS firms have higher income variation, suggesting cash buffering is triggered by income shocks. High CCFS firms do not suffer from financing constraints measured by a wide selection of indicators. Our results suggest that the CCFS is not an adequate indicator to capture financing constraints. Rather, a higher CCFS indicates smoothing of income fluctuations by installing a cash buffer that successfully prevents future income shortfall.
Notes: [D'Espallier, Bert] Univ Brussel, Hogesch, Brussels, Belgium. [D'Espallier, Bert] Katholieke Univ Leuven, Brussels, Belgium. [Huybrechts, Jolien] Hasselt Univ, Hasselt, Belgium. [Schoubben, Frederiek] Lessius Univ Coll, Leuven, Belgium. [Schoubben, Frederiek] Katholieke Univ Leuven, Leuven, Belgium.
URI: http://hdl.handle.net/1942/18188
DOI: 10.1111/acfi.12027
ISI #: 000346490100004
ISSN: 0810-5391
Category: A1
Type: Journal Contribution
Validation: ecoom, 2016
Appears in Collections: Research publications

Files in This Item:

Description SizeFormat
N/A229.29 kBAdobe PDF

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.