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  • NyborgWang2020_JFE_Forthcoming_CashLiquidity

    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial, 142, 2, 2021 DOI: 10.1016/j.jfineco.2021.05.027

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The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive. / Nyborg, Kjell; Wang, Jesse.
In: Journal of Financial Economics, Vol. 142, No. 2, 30.11.2021, p. 905-927.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Nyborg, K & Wang, J 2021, 'The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive', Journal of Financial Economics, vol. 142, no. 2, pp. 905-927. https://doi.org/10.1016/j.jfineco.2021.05.027

APA

Nyborg, K., & Wang, J. (2021). The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive. Journal of Financial Economics, 142(2), 905-927. https://doi.org/10.1016/j.jfineco.2021.05.027

Vancouver

Nyborg K, Wang J. The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive. Journal of Financial Economics. 2021 Nov 30;142(2):905-927. Epub 2021 Oct 10. doi: 10.1016/j.jfineco.2021.05.027

Author

Nyborg, Kjell ; Wang, Jesse. / The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive. In: Journal of Financial Economics. 2021 ; Vol. 142, No. 2. pp. 905-927.

Bibtex

@article{ec4a637e4fc446d9b16fbfb901aa849f,
title = "The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive",
abstract = "Enhanced stock liquidity increases a firm{\textquoteright}s propensity to hold cash. This is surprising given the view that improved stock liquidity reduces financial constraints. We propose that firms have a repurchase motive for holding cash. Higher stock liquidity strengthens this incentive. Consistent with this, firms with more liquid stock increase cash holdings relatively more when restrictions to repurchases are eased. The effect of stock liquidity on cash holdings is not influenced by access to credit markets. Our findings suggest that the repurchase motive dominates the real investments motive with respect to the effect of stock liquidity on cash holdings.",
keywords = "Corporate cash holdings, Stock liquidity, Repurchases, Credit lines, Stock liquidity, Repurchases, Credit lines",
author = "Kjell Nyborg and Jesse Wang",
note = "This is the author{\textquoteright}s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial, 142, 2, 2021 DOI: 10.1016/j.jfineco.2021.05.027",
year = "2021",
month = nov,
day = "30",
doi = "10.1016/j.jfineco.2021.05.027",
language = "English",
volume = "142",
pages = "905--927",
journal = "Journal of Financial Economics",
issn = "0304-405X",
publisher = "Elsevier",
number = "2",

}

RIS

TY - JOUR

T1 - The Effect of Stock Liquidity on Cash Holdings: The Repurchase Motive

AU - Nyborg, Kjell

AU - Wang, Jesse

N1 - This is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial, 142, 2, 2021 DOI: 10.1016/j.jfineco.2021.05.027

PY - 2021/11/30

Y1 - 2021/11/30

N2 - Enhanced stock liquidity increases a firm’s propensity to hold cash. This is surprising given the view that improved stock liquidity reduces financial constraints. We propose that firms have a repurchase motive for holding cash. Higher stock liquidity strengthens this incentive. Consistent with this, firms with more liquid stock increase cash holdings relatively more when restrictions to repurchases are eased. The effect of stock liquidity on cash holdings is not influenced by access to credit markets. Our findings suggest that the repurchase motive dominates the real investments motive with respect to the effect of stock liquidity on cash holdings.

AB - Enhanced stock liquidity increases a firm’s propensity to hold cash. This is surprising given the view that improved stock liquidity reduces financial constraints. We propose that firms have a repurchase motive for holding cash. Higher stock liquidity strengthens this incentive. Consistent with this, firms with more liquid stock increase cash holdings relatively more when restrictions to repurchases are eased. The effect of stock liquidity on cash holdings is not influenced by access to credit markets. Our findings suggest that the repurchase motive dominates the real investments motive with respect to the effect of stock liquidity on cash holdings.

KW - Corporate cash holdings, Stock liquidity, Repurchases, Credit lines

KW - Stock liquidity

KW - Repurchases

KW - Credit lines

U2 - 10.1016/j.jfineco.2021.05.027

DO - 10.1016/j.jfineco.2021.05.027

M3 - Journal article

VL - 142

SP - 905

EP - 927

JO - Journal of Financial Economics

JF - Journal of Financial Economics

SN - 0304-405X

IS - 2

ER -