DOI QR코드

DOI QR Code

Corporate cash holdings and life-cycle

기업현금과 라이프사이클

  • Jo, Kyeong Je (Department of Business Administration, Andong National University) ;
  • Song, Joon Hyup (Department of Business Administration, Andong National University)
  • Received : 2017.08.29
  • Accepted : 2017.09.21
  • Published : 2017.09.30

Abstract

This paper examines there is any differences among determinants of cash holdings and marginal value of cash depending on the life-cycle of firm. To accomplish these objective, we collect financial and market data of KRX listing firms for a period of 2001-2013. We present evidence of significant effect of life-cycle on the cash holdings determinants and marginal value of cash. Specially, the effect of investment opportunity related variable are varies through life-cycle. The results also suggest that marginal values of cash in the introduction stage and exit stage is higher than those in other stages. Overall, this means that the motive of cash holdings in Korean firms is weak. and shareholders place different value on a firm's cash holdings depending on the life-cycle.

본 샘플은 2001년부터 2013년까지 유가증권시장 기업의 재무특성과 라이프사이클을 동시에 고려하여 현금보유수준과 현금한계가치 결정요인을 분석했다. 본 연구의 주요한 연구결과는 다음과 같다. 첫째, 유가증권기업의 평균현금보유수준은 총자산대비 5.12%로 2000년 초에 비해서 소폭 상승했지만 외국 선행연구에서처럼 대폭적인 현금증가는 관찰되지 않았다. 평균현금보유 추이는 금융위기 발발이후 2008년경 전반적으로 상승했으나, 지난 13년 동안 최종적인 현금보유는 0.76%포인터 증가에 불과했다. 둘째, 기업라이프사이클에 따라서 현금보유수준의 결정요인의 영향정도가 서로 다르고 그 중에서도 투자기회와 관련된 변수들이 차이를 나타냈다. 기업현금의 예비적 수요 및 거래적 수요는 모두 감소한 것으로 파악되었다. 셋째, 기업라이프사이클에 따라서 현금한계가치가 서로 다르게 평가되고, 전체적으로 선행연구에 비해서 한계가치가 현저히 낮게 산출되었다. 넷째, 이러한 증거들은 유가증권시장 기업들이 투자기회의 위축 등으로 현금을 축적하고자하는 유인이 감소했음을 시사한다.

Keywords

References

  1. Acharya, V. V., Almeida, H. and Campello, M. (2007). Is cash negative debt? A hedging perspective on corporate financial policies. Journal of Financial Intermediation, 16, 515-554. https://doi.org/10.1016/j.jfi.2007.04.001
  2. Adam, T. and Goyal, V. (2008). The investment opportunity set and its proxy variables. The Journal of Financial Research, 31, 41-63. https://doi.org/10.1111/j.1475-6803.2008.00231.x
  3. Almeida, H., Campello, M., and Weisbach, M. S. (2004). The cash flow sensitivity of cash. Journal of Finance, 59, 1777-1804. https://doi.org/10.1111/j.1540-6261.2004.00679.x
  4. Barclay, M. J. and Smith, C. W. (1995). The maturity structure of corporate debt. Journal of Finance, 50, 609-631. https://doi.org/10.1111/j.1540-6261.1995.tb04797.x
  5. Bates, T. W., Kahle, K. M. and Stulz, R. M. (2009). Why do U.S. firms hold so much more cash than they used to? Journal of Finance, 59, 1985-2021.
  6. Begenau, J. and Palazzo, B. (2016). Firm selection and corporate cash holdings, Working Paper.
  7. Baumol, W. (1952). The transaction demand for cash: An inventory theoretic approach. The Quarterly Journal of Economics, 66. 545-556. https://doi.org/10.2307/1882104
  8. D’Mello, R., Krishnaswami, S. Larkin, P. J. (2008). Determinants of corporate cash holdings, evidence from spin-offs. Journal of Banking & Finance, 32, 1209-1220. https://doi.org/10.1016/j.jbankfin.2007.10.005
  9. Dickinson, V. (2011). Cash flow patterns as a proxy for firm life cycle. The Accounting Review, 86, 1969-1994. https://doi.org/10.2308/accr-10130
  10. Dittmar, A. and Mahrt-Smith, J. (2007). Corporate governance and the value of cash holdings. Journal of Financial Economics, 83, 599-634. https://doi.org/10.1016/j.jfineco.2005.12.006
  11. Dittmar, A., Mahrt-Smith, J. and Servaes, H. (2003). International corporate governance and corporate cash holdings. Journal of Financial and Quantitative Analysis, 38, 111-133. https://doi.org/10.2307/4126766
  12. Dittmar, A. and Duchin, R. (2011). The Dynamics of cash, Working Paper.
  13. Drobetz W., Halling, M. and Schroder, H. (2015). Corporate life-cycle dynamics of cash holdings, Working Paper.
  14. Duchin, R. (2010). Cash holdings and corporate diversification. Journal of Finance, 65, 955-992. https://doi.org/10.1111/j.1540-6261.2010.01558.x
  15. Fama, E. F. and French, K. R. (1993), Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33, 3-56. https://doi.org/10.1016/0304-405X(93)90023-5
  16. Fama, E. F. and French, K. R. (1998). Taxes, financing decisions, and firm value. Journal of Finance, 53, 819-843. https://doi.org/10.1111/0022-1082.00036
  17. Faulkender, M. (2002). Cash holdings among small businesses, Working Paper.
  18. Faulkender, M. and Wang, R. (2006). Corporate financial policy and the value of cash. Journal of Finance, 61, 1957-1990. https://doi.org/10.1111/j.1540-6261.2006.00894.x
  19. Ferreira, M. A. and Vilela, A. S. (2004). Why do firms hold cash? Evidence from EMU countries. European Financial Management, 10, 295-319. https://doi.org/10.1111/j.1354-7798.2004.00251.x
  20. Foley, C. F., Hartzell, J. C., Titman, S. and Twite, G. (2007). Why do firms hold so much cash? A tax-based explanation. Journal of Financial Economics, 86, 579-607. https://doi.org/10.1016/j.jfineco.2006.11.006
  21. Flannery, M .J. and Rangan, K. P. (2006). Partial adjustment toward target capital structures. Journal of Financial Economics, 79, 469-506. https://doi.org/10.1016/j.jfineco.2005.03.004
  22. Frank, M. Z. and Goyal, V. K. (2008). Trade-off and pecking order theories of debt, Espen Eckbo (ed.), Handbook of Corporate Finance, Empirical Corporate Finance (Handbooks in Finance Series, Elsevier/North-Holland), Chapter 7.
  23. Frank, M. Z. and Goyal, V. K. (2009), Capital structure decisions: Which factors are reliably important? Financial Management, 38, 1-37. https://doi.org/10.1111/j.1755-053X.2009.01026.x
  24. Graham J. R. and Leary, M. T. (2015). The Evolution of corporate cash, Working Paper.
  25. Harford, J. (1999). Corporate cash reserves and acquisitions. Journal of Finance, 54, 1969-1997. https://doi.org/10.1111/0022-1082.00179
  26. Jalivand, A. and Harris, R. (1984). Corporate behavior in adjusting to capital structure and dividedn targets: An econometric study. Journal of Finance, 39, 127-145. https://doi.org/10.1111/j.1540-6261.1984.tb03864.x
  27. Jensen, M. C. and Meckling, W. H. (1976). Theory of the firm, nanagerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
  28. Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76, 323-329.
  29. John, T. A. (1993). Accounting measures of corporate liquidity, leverage, and costs of financial distress. Financial Management, 22, 91-100. https://doi.org/10.2307/3665930
  30. Jung, K. and Kim, B. (2008). Corporate cash holdings and tax-induced debt financing. Asia-Pacific Journal of Financial Studies, 37, 983-1023. https://doi.org/10.1111/j.2041-6156.2008.tb00001.x
  31. Keyens. J. H. (1936). The general theory of money, interest and employment, Reprinted in the collected writings of John maynard keynens 7.
  32. Kim, C. S., Mauer, D. C. and Sherman, A. E. (1998). The determinants of corporate liquidity, Theory and evidence. Journal of Financial and Quantitative Analysis, 33, 335-359. https://doi.org/10.2307/2331099
  33. Kim, S.P. (2007). The Influence of Corporate Ownership Structure on Cash Holdings. Korean Management Review, 36, 739-763.
  34. Keefe, M. O'C. and Kieschnick, R. (2013). Why does the marginal value of cash to shareholders vary over time, Working Paper.
  35. Kraus, A. and Litzenberger. (1973). A state-preference model of opitmal financial leverage. Journal of Finance, 28, 911-922. https://doi.org/10.1111/j.1540-6261.1973.tb01415.x
  36. Muliert, M., Schoors, K. and Merlevede, B. (2014). Investment cash flow sensitivity, The role of cash flow volatility, Working Paper.
  37. Mikkelson, W. H. and Partch, M. M. (2003). Do persistent large cash reserves hinder performance? Journal of Financial and Quantitative Analysis, 38, 275-294. https://doi.org/10.2307/4126751
  38. Miller, D. and Friesen, P. H. (1984). A Longitudinal study of the corporate life cycle. Management Science, 30, 1161-1183. https://doi.org/10.1287/mnsc.30.10.1161
  39. Miller, M. and Orr, D. (1966). A model of the demand for money by firms. The Quarterly Journal of Economics, 80, 413-435. https://doi.org/10.2307/1880728
  40. Modigliani, F. and Miller, M. H. (1963). Corporate income taxes and the cost of capital, A correction. The American Economic Review, 53, 433-443.
  41. Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5, 147-175. https://doi.org/10.1016/0304-405X(77)90015-0
  42. Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39, 574-592. https://doi.org/10.1111/j.1540-6261.1984.tb03646.x
  43. Myers, S. C. and Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187-221. https://doi.org/10.1016/0304-405X(84)90023-0
  44. Oler, D. K. and Picconi, M. P. (2014). Implications of insufficient and excess cash for future performance. Contemporary Account Research, 31, 253-283. https://doi.org/10.1111/1911-3846.12012
  45. Opler, T. C., Pinkowitz, L., Stulz, R. M. and Williamson, R. (1999). The determinants and Implications of corporate cash holdings. Journal of Financial Economics, 52, 3-46. https://doi.org/10.1016/S0304-405X(99)00003-3
  46. Ozkan, A. and Ozkan, N. (2004). Corporate cash holdings, An empirical investigation of UK companies. Journal of Banking & Finance, 28, 2103-2134. https://doi.org/10.1016/j.jbankfin.2003.08.003
  47. Pinkowitz, L. and Williamson, R. (2001). Bank power and cash holdings, Evidence from Japan. Review of Financial Studies, 14, 1059-1082. https://doi.org/10.1093/rfs/14.4.1059
  48. Park, C. G. and Nam. H. J. (2014). An Internalization and cash holdings of corporation. The Korean Journal of Financial Engineering, 13, 129-148.
  49. Pinkowitz, L., Dahiya, E., Dastidar, P. and Harford, J. (2002). The market for corporate control and corporate cash holdings, Working Paper.
  50. Pinkowitz, L. and Williamson, R. (2002). What is a dollar worth? The market value of cash holdings, Working Paper.
  51. Saddour, K. (2006). The determinants and the value of cash holdings: Evidence from french firms, Working Paper.
  52. Seo, J. Y. (2011), Is korean SMEs' cash holding level target-oriented? The Korean Academic Association of Business Administration, 24, 2729-2744.
  53. Shin. M. S. and Kim, S. E. (2010), The relations between ownership structure and cash holdings of firms. The Korean Journal of Financial Management, 27, 89-120.
  54. Stulz, R. M. (1990). Managerial discretion and optimal financing policies. Journal of Financial Economics, 26, 3-27. https://doi.org/10.1016/0304-405X(90)90011-N
  55. Shyam-Sunder, L. and Myers, S. C. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics, 51, 219-244. https://doi.org/10.1016/S0304-405X(98)00051-8
  56. Titman, S. and Wessels, R. (1988). The determinants of capital structure choice. Journal of Finance, 43, 1-19. https://doi.org/10.1111/j.1540-6261.1988.tb02585.x
  57. Tobin. J. (1956). The interest-elasticity of transactions demand for cash. The review of Economics and Statistics, 38, 241-247. https://doi.org/10.2307/1925776
  58. Whalen, E. (1966). A rationalization of the precautionary demand for cash. The Quarterly Journal of Economics, 80, 314-324. https://doi.org/10.2307/1880695
  59. Weidemann, J. F. (2015). A State-of-the-art review of corporate cash holding Research, Working Paper.
  60. Wooldridge, J. M. (2002). Econometric analysis of cross Section and panel data, The MIT Press.
  61. Yang, H., Choi J. S., Han, J. T. and Jeong, J. (2015). Influence of tuition and scholarship on the stop-out rate: An empirical analysis using panel regression model. Journal of the Korean Data & Information Science Society, 26, 631-638. https://doi.org/10.7465/jkdi.2015.26.3.631