The Impact of Macroeconomic Uncertainty on Cash Holdings for Non-Financial Firms

Arbeitspapier

This paper investigates the effects of macroeconomic volatility on non-financial firms' cash holding behavior. Using an augmented cash buffer-stock model, we demonstrate that an increase in macroeconomic volatility will cause the cross-sectional distribution of firms' cash-to-asset ratios to narrow. We test this prediction on a panel of non-financial firms drawn from the annual COMPUSTAT database covering the period 1957-2000, and find that as macroeconomic uncertainty increases, firms behave more homogeneously. Our results are shown to be robust to the inclusion of the levels of several macroeconomic factors.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 410

Classification and Topics

• Classification: Wirtschaft
• Subject: Cash holdings ; macroeconomic uncertainty ; time series ; ARCH ; non-financial firms ; Liquide Mittel ; Betriebliche Liquidität ; Makroökonomischer Einfluss ; Volatilität ; Konjunktur ; Schätzung ; Vereinigte Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Talavera, Oleksandr ; Ozkan, Neslihan ; Caglayan, Mustafa ; Baum, Christopher F.
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/18106
• Last update: 10.03.2025, 11:42 AM CET