The 272th Wenlan Financial Forum

Abstract:

Companies may hoard cash out of precautionary motives or managerial self-interest. While precautionary incentives predict that cash and derivatives hedges will act as substitutes and thus be negatively correlated, using a sample of large US firms over the period 2001-2018, we find that the relationship is positively correlated. Moreover, this positive relationship seems to be concentrated among firms facing larger agency conflicts. Finally, we find that increases in cash holdings and derivatives holdings correlate with declines in company values. The results of this paper suggest that agency conflict is an important determinant of cash holdings in large US listed companies and add to the limited empirical evidence on this.

Speaker Introduction:

Xiaoou Yu is an associate professor at the Institute of Financial Management and Accounting, Xiamen University. Mr. Bauer graduated from the C.T. Bauer College of Business at the University of Houston with a Ph.D. in Business administration. His research interests include financial information disclosure, corporate finance, labor and finance. I have published many papers in well-known academic journals at home and abroad, including Accounting Research, Management World, Management Science, Journal of Accounting, Auditing & Finance, Journal of Business Research, Accounting and Finance, etc., presided over and participated ina number of provincial and national projects.