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6_The_Adjustment_Speed_of_Corporate_Cash_Holdings.pdf (132.88 kB)
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The adjustment speed of corporate cash holdings

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posted on 2020-05-13, 09:52 authored by Yi Xu

The current literature provides some empirical evidences about whether firms have target ratios of cash holdings. In my thesis, I employ a partial-adjustment model with panel data of Compustat Industrial Annual tapes during 1974 to 2006. I find evidence supportive of target corporate cash ratios. A typical firm closes each year over 50% of the gap between the actual target cash ratios and its long-run target. My results also indicate that the adjustment speed of cash holdings increases if firm sizes are smaller, firms are more financially constrained or firms have more growth opportunities.


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  • Master thesis

Degree awarded

MSc in Finance

Year degree awarded



Wang Rong

SMU School

  • Lee Kong Chian School of Business

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