دانلود رایگان مقاله انگلیسی بینش جدید درباره رابطه بین دارایی های نقدی شرکت و نرخ بهره - اشپرینگر 2018

Abstract

Between 1970 and 2014 the federal funds rate soared from approximately 7.18 % to 16.38 %, and subsequently declined to 0.09 %. Based on economic theory, corporate cash holdings should have moved inversely with these interest rate swings. Using a new measure of cash holdings and a random effects threshold model, we examine this relationship over the past four and a half decades and show that the expected negative relationship does not exist. Furthermore, some established motives for cash holdings do not explain these results. Using a quantile regression, we show that a positive relationship between cash holdings and interest rates exists among all quantiles of cash holdings. All of these results imply that there is not one particular group of firms that is driving the positive relationship and a revised theory of the relationship between interest rates and cash holdings may be warranted.

8 Conclusion

This paper examines the relationship between cash holdings and interest rates as measured by the federal funds rate. To test the relationship, a random effects threshold model is used and tested over multiple thresholds. To exclude capturing the positive relationship between marketable securities and interest rates, a new cash holdings variable is used that includes cash and cash equivalents, but not marketable securities. Even with the new cash holdings variable, several positive relationships still exist between cash holdings and interest rates, particularly with interest rates from the 1990’s forward.

To further examine what is driving the positive relationship, several alternative explanations are tested: the tax-based explanation, pension fund contributions, zeroleverage firms, financially constrained and unconstrained firms, firm governance, and high-tech firms. After dividing the data sets into domestic and multinational companies, the positive relationship is found for domestic firms. Thus, the tax-based explanation does not explain the relationship. After including two measures of pension contributions as an explanatory variable, the positive relationship is still unaffected. It is found that zero-leverage firms and high-tech firms hold large amounts of cash; after omitting these firms separately from the data sets the positive relationship continues to hold. After dividing the data up into financially constrained and unconstrained firms based on three separate measures, the positive relationship still exists for both financially constrained and unconstrained firms. Lastly, the positive relationship is still found when controlling for firm governance. Thus, none of the explanations provided are able to explain why a negative relationship does not exist. Finally, quantile regressions find that there is not one group of firms that are driving the positive relationship as firms with low cash holdings are driving some of the results and firms with high cash holding are driving the remainder of the results.