Cash holdings of listed and unlisted firms new evidence from the euro area_accepted.pdf (343.03 kB)
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Cash holdings of listed and unlisted firms: new evidence from the euro area

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journal contribution
posted on 12.09.2019, 14:30 by Panagiotis AsimakopoulosPanagiotis Asimakopoulos, Stylianos Asimakopoulos, Filipa Da Silva Fernandes
This paper examines the cash holdings behavior of listed and unlisted firms. We argue that unlisted firms, which are smaller, face a greater wedge between the cost of external and internal finance and as a result they need to rely more on the later. Relying on internal funds means that firms have a precautionary motive to hold cash. We test our theory using an unbalanced panel of mainly small medium enterprises within the euro area over the period 2003–2017 paying special attention to the role of financial pressure, financial constraints and the recent financial crisis. Our findings reveal that unlisted firms hold more cash than their listed counterparts due to precautionary motives. In addition, when considering the effect of financial pressure, the results show that the difference in cash holdings between listed and unlisted firms exhibit a ‘U-shaped’ relationship. Finally, unlisted firms have a higher sensitivity to save cash out of cash flow than listed firms. Our results are robust to using different specifications and different financial pressure measures.

History

School

  • Business and Economics

Department

  • Business

Published in

The European Journal of Finance

Volume

25

Issue

17

Pages

1708 - 1729

Publisher

Taylor & Francis (Routledge)

Version

AM (Accepted Manuscript)

Rights holder

© Informa UK Limited, trading as Taylor & Francis Group

Publisher statement

This is an Accepted Manuscript of an article published by Taylor & Francis in The European Journal of Finance on 12 August 2019, available online: http://www.tandfonline.com/10.1080/1351847X.2019.1652197.

Acceptance date

30/07/2019

Publication date

2019-08-12

Copyright date

2019

ISSN

1351-847X

eISSN

1466-4364

Language

en

Depositor

Dr Panagiotis Asimakopoulos