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  • Ghaly, Dang, & Stathopoulos (RFS, forthcoming)

    Rights statement: This is a pre-copy-editing, author-produced PDF of an article accepted for publication in The Review of Financial Studies following peer review. The definitive publisher-authenticated version Mohamed Ghaly, Viet Anh Dang, Konstantinos Stathopoulos; Cash Holdings and Labor Heterogeneity: The Role of Skilled Labor, The Review of Financial Studies, Volume 30, Issue 10, 1 October 2017, Pages 3636–3668, https://doi.org/10.1093/rfs/hhx045 is available online at: https://academic.oup.com/rfs/article/3835431/Cash-Holdings-and-Labor-Heterogeneity-The-Role-of

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Cash holdings and labor heterogeneity: the role of skilled labor

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<mark>Journal publication date</mark>10/2017
<mark>Journal</mark>Review of Financial Studies
Issue number10
Volume30
Number of pages33
Pages (from-to)3636–3668
Publication statusPublished
Early online date19/05/17
Original languageEnglish

Abstract

Firms differ in their dependence on skilled labor, and face labor adjustment costs that increase with their workers’ skill level. We show that firms with a higher share of skilled workers, and thus less flexibility to adjust their labor demand in response to cash flow shocks, hold more precautionary cash. The effect of labor skills on cash holdings is more pronounced for financially constrained firms and varies with exogenous differences in firing and hiring costs. We address endogeneity concerns by using subsamples of firms with reasonably similar characteristics, propensity score matching, and a quasi-experimental shock to labor markets.

Bibliographic note

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in The Review of Financial Studies following peer review. The definitive publisher-authenticated version Mohamed Ghaly, Viet Anh Dang, Konstantinos Stathopoulos; Cash Holdings and Labor Heterogeneity: The Role of Skilled Labor, The Review of Financial Studies, Volume 30, Issue 10, 1 October 2017, Pages 3636–3668, https://doi.org/10.1093/rfs/hhx045 is available online at: https://academic.oup.com/rfs/article/3835431/Cash-Holdings-and-Labor-Heterogeneity-The-Role-of