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Firm Selection and Corporate Cash Holdings / Juliane Begenau, Berardino Palazzo.
- Format:
- Book
- Author/Creator:
- Begenau, Juliane.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w23249.
- NBER working paper series no. w23249
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2017.
- Summary:
- Among stock market entrants, more firms over time are R&D-intensive with initially lower profitability but higher growth potential. This sample-selection effect determines the secular trend in U.S. public firms' cash holdings. A stylized firm industry model allows us to analyze two competing changes to the selection mechanism: a change in industry composition and a shift toward less profitable R&D-firms. The latter is key to generating higher cash ratios at IPO, necessary for the secular increase, whereas the former mechanism amplifies this effect. The data confirm the prominent role played by selection, and corroborate the model's predictions.
- Notes:
- Print version record
- March 2017.
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