دانلود رایگان مقاله انگلیسی قابلیت اطمینان، دارایی های نقدی و توسعه مالی - الزویر 2018

Abstract

Rising intangible assets on corporate balance sheets around the world could limit borrowing capacity and consequently hinder growth if firms must preserve cash and forgo investment opportunities. We show that financial development lowers the sensitivity of cash holdings to tangible assets and promotes firm growth. We also find that sectors with a smaller proportion of tangible assets grow faster in countries with more developed financial markets. Our analysis reveals an important asset tangibility channel through which financial development facilitates firm growth.

4. Conclusion

In the presence of contracting frictions and limited enforceability, tangible assets are conventionally demanded by external capital providers as collateral against borrowing. The decline of tangible capital on corporate balance sheets in recent decades could limit firms’ debt capacity and compel cash hoarding. Stiff cash policy is costly as excess cash reserve is often accumulated at the expense of forgoing investment opportunities. Therefore, the cash cost of tangibility has significant implications on corporate policies and country-level economic growth. In light of the rising importance of intangible capital in corporate asset portfolio, it is of great importance to understand how the development of a country’s financial system shapes corporate cash reserves and investment decisions through the channel of tangible assets.

Using data covering 45 countries from 1990 to 2013, we find strong evidence that financial development reduces the sensitivity of cash holdings to asset tangibility. Our findings also highlight that institutions, which enhance financial development in terms of better creditor rights and transparency, alleviate cash-tangibility sensitivity. Furthermore, we show that financial development promotes investment made by firms with fewer tangible assets, and allows lowtangibility industries to grow faster. Our results further the understanding of the determinants of cash holdings by showing that country-level factors (e.g., financial development and institutional quality) could interact with firm-specific characteristics in shaping corporate cash policy.