Cash holdings of listed and unlisted firms

new evidence from the euro area

Panagiotis Asimakopoulos (Corresponding Author), Stylianos Asimakopoulos, Filipa Da Silva Fernandes

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

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.
Original languageEnglish
Pages (from-to)1708-1729
Number of pages21
JournalEuropean Journal of Finance
Volume25
Issue number17
Early online date12 Aug 2019
DOIs
Publication statusPublished - 2019

Fingerprint

New firms
Euro area
Cash holdings
Cash
Precautionary motive
Financial constraints
Unbalanced panels
Costs
Finance
Financial crisis
Small and medium-sized enterprises
Cash flow

Keywords

  • cash holdings
  • listed and unlisted firms
  • precautionary motives
  • financial pressure
  • PANEL
  • DETERMINANTS
  • FLOW SENSITIVITY
  • CORPORATE GOVERNANCE
  • PRESSURE
  • DEMAND
  • FINANCIAL CONSTRAINTS
  • Cash holdings
  • AGENCY COSTS
  • EQUITY

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)

Cite this

Cash holdings of listed and unlisted firms : new evidence from the euro area . / Asimakopoulos, Panagiotis (Corresponding Author); Asimakopoulos, Stylianos; Fernandes, Filipa Da Silva.

In: European Journal of Finance, Vol. 25, No. 17, 2019, p. 1708-1729.

Research output: Contribution to journalArticle

Asimakopoulos, Panagiotis ; Asimakopoulos, Stylianos ; Fernandes, Filipa Da Silva. / Cash holdings of listed and unlisted firms : new evidence from the euro area . In: European Journal of Finance. 2019 ; Vol. 25, No. 17. pp. 1708-1729.
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