Publisher : The Korea Academia-Industrial cooperation Society
DOI : 10.5762/KAIS.2015.16.10.7118
Title & Authors
Searching for an Optimal Level of Cash Holdings for Korean Chaebols Kim, Hanjoon;
This study examined one of the concerned or even imperative issues in the field of contemporary finance related to approaching an optimal level of cash holdings for the firms belonging to the chaebols in the Korean domestic capital markets. However, the subject may not have been drawn much attention so far, even if there are still ongoing and active debates among the interest parties at the macro- or micro-level. Two primary hypotheses were postulated to be empirically tested. On the results of the first hypothesis test for the existence of an optimal cash reserves for the sample firms, two estimation techniques were performed in terms of a quadratic regression equation and a relationship between a firm's value and the residuals derived from the static panel date model. As a primary financial implication of the study which may contribute to the practitioners and the academics in finance, the optimal level of cash holdings can be estimated by controlling for the a priori significant components for the sample firms towards maximizing firm value.
B. Al-Najjar, "The Determinants of Corporate Cash Holdings: Evidence from Some Emerging Markets", International Business Review, Vol.22, pp. 77-88, 2013. DOI: http://dx.doi.org/10.1016/j.ibusrev.2012.02.004
A. Gill and C. Shah, "Determinants of Corporate Cash Holdings: Evidence from Canada", International Journal of Economics and Finance, pp. 70-79, Vol.4, No.1, 2012. DOI: http://dx.doi.org/10.5539/ijef.v4n1p70
C. Y. Horioka and A. Terada-Hagiwara, "Corporate Cash Holding in Asia", Asian Economic Journal, pp. 323-345, Vol.28, No.4, 2014. DOI: http://dx.doi.org/10.1111/asej.12039
H. Kim,, "Contemporary Financial Profile and Its Implications on the Level of Corporate Cash Holdings for Korean Chaebol Firms", Journal of the Korea Academia-Industrial Cooperation Society, Forthcoming, 2015. DOI: http://dx.doi.org/10.5762/kais.2015.16.6.3870
H. Kim, "Further Investigations on the Financial Characteristics of Cash Reserves for the Chaebol Firms in the Korean Capital Markets", J. of the Korea Contents Association, Forthcoming, 2015. DOI: http://dx.doi.org/10.5392/jkca.2015.15.07.436
Y. Lian., M. Sepehri, and M. Foley, "Corporate Cash Holdings and Financial Crisis: An Empirical Study of Chinese Companies", Eurasian Business Review, Vol.1, No.2, pp. 112-124, 2011.
H. Kim, "Financial Aspects of Korean Chaebol Firms in terms of Trend of Cash Holdings and Type of a Domestic Bourse", J. of the Korea Contents Association, Forthcoming, 2015.
A. Shah, "The Corporate Cash Holdings: Determinants and Implications", African J. of Business Management, Vol.54, No.34, pp.12939-12950, 2011.
C. Martinez-Sola, P. Garcia-Teruel, and P. Martinez-Solano, "Corporate Cash Holding and Firm Value", Applied Economics, Vol.45, pp.161-170, 2013. DOI: http://dx.doi.org/10.1080/00036846.2011.595696
V. Subramaniam,, T. T. Tang, H. Yue, and X. Zhou, "Firm Structure and Corporate Cash Holdings", Journal of Corporate Finance, 759-773, Vol.17, 2011. DOI: http://dx.doi.org/10.1016/j.jcorpfin.2010.06.002
M. Jensen, "Agency Costs of Free Cash Flow, Corporate Finance and Takeovers", American Economic Review, pp. 323-329, Vol.76, 1986.