This thesis examines important topics in corporate cash holdings and forecaster overconfidence. First, I provide an in-depth study of the interaction between intra-industry contagion risk and cash holdings. I develop a novel measure of a firm’s exposure to contagion risk that builds on the firm’s stock return comovement with other industry participants and separates contagion and competition effects caused by the expected financial distress of its industry peers. I show that high contagion-risk firms hold more cash because they face higher costs of external finance due to the potential decrease in their collateral values and the increased likelihood of their future financial distress caused by the net contagion effect. Second, in a co-authored paper with Drs. Jiaping Qiu and Chi Wan, we conduct a cross-country analysis to examine how financial development affects the reliance of corporate liquidity management on tangible capital. We find that financial development and better institutions lower the cash-tangibility sensitivity. This supports the view that financial development reduces the collateral role of tangible assets, thereby relaxing financial constraints of firms with low asset tangibility. This provides further firm-level evidence and sheds new light on the link between financial development and economic growth, as financial development promotes more efficient allocations of economic resources and hence facilitates investments and economic growth. Third, in a co-authored paper with Drs. Richard Deaves and Michael Schröder, we document using the ZEW panel of German stock market forecasters that weak forecasters tend to be overconfident in the sense that they provide extreme forecasts and their confidence intervals are less likely to contain eventual realizations. Moderate filters based on forecast accuracy over short rolling windows are somewhat successful in improving predictability. While poor performance can be due to various factors, a filter based on a prior tendency to provide extreme forecasts also improves predictability. / Thesis / Doctor of Philosophy (PhD)

As organizações, para financiar suas atividades, fazem uso de fontes internas e externas de recursos financeiros. Entretanto, na presença de imperfeições no mercado de capitais, como assimetria de informações, problemas de agência e custos de transação, elas podem optar por uma fonte em detrimento a outra. As imperfeições do mercado aliadas as restrições de financeiras podem afetar o gerenciamento de caixa das organizações. Em contextos de crise, por exemplo, os efeitos da indisponibilidade de financiamento podem ser ainda maiores. Sendo assim, este trabalho teve como objetivo analisar os efeitos das Restrições Financeiras e crise financeira sobre as políticas de caixa, assim como, estudar os impactos de uma boa Governança Corporativa e seus efeitos sobre os níveis de caixa. Para tanto, fez-se uso de uma amostra composta por 141 empresas de capital aberto, não financeiras, obtidas por meio da base de dados Economática®. O período analisado compreende 15 anos, iniciando em 2000 e se estendendo até 2014. Optou-se pela utilização do modelo de regressão com dados em painel, por meio de um painel desbalanceado, no intuito de não reduzir o número de observações utilizadas (1906). Os resultados indicaram que o nível de caixa das organizações é impactado pelo nível de sua restrição financeira, assim como por contextos de crise, onde as companhias elevaram as suas reservas de caixa sob tal cenário. De forma geral, observou-se uma associação positiva entre as variáveis de Governança Corporativa utilizadas, apesar de apenas uma ter obtido significância estatística. Logo, o resultado obtido sugere que os acionistas de uma empresa permitem ao agente gerenciar maiores reservas de caixa apenas quando há mecanismos de governança corporativa para protegê-las. Além do mais, os resultados ainda indicam que as boas práticas de governança corporativa fornecem um meio de controlar as ações dos gestores, de modo que eles utilizem as reservas de caixa apenas em situações que maximizem a utilidade dos acionistas, evitando, assim, o gasto excessivo de caixa. Em relação a adoção das normas internacionais de contabilidade (IFRS), verificou-se uma redução significativa dos níveis de caixa posteriormente a segunda fase de adoção às normas, assim como uma associação negativa e significativa entre a variável dummy representando a adoção obrigatória. Sendo assim, este trabalho contribui com a literatura científica de maneira a fornecer evidências acerca dos efeitos das restrições financeiras, uma boa governança corporativa, crise financeira e adoção do padrão IFRS sobre as políticas de caixa das companhias brasileiras / Organizations, to finance their activities, can use internal and external sources of financial resources. However, in the presence of imperfections in the capital market, as asymmetric information, agency problems and transaction costs, they can choose one over the other. The imperfections of the market coupled with financial restrictions may affect the cash management of organizations. In times of crisis, for example, the effects of the unavailability of funding may also be higher. Thus, this study aimed to analyze the effects of Financial Restrictions and financial crisis on cash holdings, as well as study the impacts of a good Corporate Governance and its effects on cash levels. To do so, we used a sample of 141 listed companies, non-financial, obtained through Economática® database. The analyzed period consists of 15 years, starting in 2000 and extending to 2014. We opted for the use of the Panel Data regression model using an unbalanced panel, in order not to reduce the number of observations used (1906). The results indicated that the cash level of organizations is impacted by the level of its financial constraints, as well as for crisis contexts, where companies increased their cash reserves under such a scenario. In General, there was a positive association between the variables of Corporate Governance used, although only one has obtained statistical significance. Therefore, the obtained results suggest that the shareholders of a company allow the agent manage larger cash reserves only when there is corporate governance mechanisms to protect them. Moreover, the results also indicate that good corporate governance practices provide a way to control the actions of managers, so that they use cash holdings only in situations that maximize the value of shareholders, thus avoiding spending excessive cash holding. Regarding the adoption of international accounting standards (IFRS), there was a significant reduction in cash levels after the second phase adoption of the standards, as well as a negative and significant association between the dummy variable representing the mandatory adoption. Thus, this study contributes to the literature in order to provide evidence about the effects of financial constraints, good corporate governance, financial crisis and the adoption of IFRS on the cash policies of Brazilian companies

As organizações, para financiar suas atividades, fazem uso de fontes internas e externas de recursos financeiros. Entretanto, na presença de imperfeições no mercado de capitais, como assimetria de informações, problemas de agência e custos de transação, elas podem optar por uma fonte em detrimento a outra. As imperfeições do mercado aliadas as restrições de financeiras podem afetar o gerenciamento de caixa das organizações. Em contextos de crise, por exemplo, os efeitos da indisponibilidade de financiamento podem ser ainda maiores. Sendo assim, este trabalho teve como objetivo analisar os efeitos das Restrições Financeiras e crise financeira sobre as políticas de caixa, assim como, estudar os impactos de uma boa Governança Corporativa e seus efeitos sobre os níveis de caixa. Para tanto, fez-se uso de uma amostra composta por 141 empresas de capital aberto, não financeiras, obtidas por meio da base de dados Economática®. O período analisado compreende 15 anos, iniciando em 2000 e se estendendo até 2014. Optou-se pela utilização do modelo de regressão com dados em painel, por meio de um painel desbalanceado, no intuito de não reduzir o número de observações utilizadas (1906). Os resultados indicaram que o nível de caixa das organizações é impactado pelo nível de sua restrição financeira, assim como por contextos de crise, onde as companhias elevaram as suas reservas de caixa sob tal cenário. De forma geral, observou-se uma associação positiva entre as variáveis de Governança Corporativa utilizadas, apesar de apenas uma ter obtido significância estatística. Logo, o resultado obtido sugere que os acionistas de uma empresa permitem ao agente gerenciar maiores reservas de caixa apenas quando há mecanismos de governança corporativa para protegê-las. Além do mais, os resultados ainda indicam que as boas práticas de governança corporativa fornecem um meio de controlar as ações dos gestores, de modo que eles utilizem as reservas de caixa apenas em situações que maximizem a utilidade dos acionistas, evitando, assim, o gasto excessivo de caixa. Em relação a adoção das normas internacionais de contabilidade (IFRS), verificou-se uma redução significativa dos níveis de caixa posteriormente a segunda fase de adoção às normas, assim como uma associação negativa e significativa entre a variável dummy representando a adoção obrigatória. Sendo assim, este trabalho contribui com a literatura científica de maneira a fornecer evidências acerca dos efeitos das restrições financeiras, uma boa governança corporativa, crise financeira e adoção do padrão IFRS sobre as políticas de caixa das companhias brasileiras / Organizations, to finance their activities, can use internal and external sources of financial resources. However, in the presence of imperfections in the capital market, as asymmetric information, agency problems and transaction costs, they can choose one over the other. The imperfections of the market coupled with financial restrictions may affect the cash management of organizations. In times of crisis, for example, the effects of the unavailability of funding may also be higher. Thus, this study aimed to analyze the effects of Financial Restrictions and financial crisis on cash holdings, as well as study the impacts of a good Corporate Governance and its effects on cash levels. To do so, we used a sample of 141 listed companies, non-financial, obtained through Economática® database. The analyzed period consists of 15 years, starting in 2000 and extending to 2014. We opted for the use of the Panel Data regression model using an unbalanced panel, in order not to reduce the number of observations used (1906). The results indicated that the cash level of organizations is impacted by the level of its financial constraints, as well as for crisis contexts, where companies increased their cash reserves under such a scenario. In General, there was a positive association between the variables of Corporate Governance used, although only one has obtained statistical significance. Therefore, the obtained results suggest that the shareholders of a company allow the agent manage larger cash reserves only when there is corporate governance mechanisms to protect them. Moreover, the results also indicate that good corporate governance practices provide a way to control the actions of managers, so that they use cash holdings only in situations that maximize the value of shareholders, thus avoiding spending excessive cash holding. Regarding the adoption of international accounting standards (IFRS), there was a significant reduction in cash levels after the second phase adoption of the standards, as well as a negative and significant association between the dummy variable representing the mandatory adoption. Thus, this study contributes to the literature in order to provide evidence about the effects of financial constraints, good corporate governance, financial crisis and the adoption of IFRS on the cash policies of Brazilian companies

TESIS PARA OPTAR AL GRADO DE MAGÍSTER EN FINANZAS / En este estudio se analizan las variables determinantes de los cash holdings en 88 firmas chilenas excluyendo utilities y real estate cotizantes en la Bolsa de Comercio de Santiago en el periodo 2004-2014. En consecuencia, se han utilizado las variables rentabilidad, tamaño de la firma, tangibilidad de los activos, liquidez, edad de la firma, variabilidad de los activos, leverage, oportunidades de crecimiento, gasto de capital, pago de dividendos, y deuda de corto plazo sobre deuda total. En especial, también se analiza la influencia de las familias, business groups y pirámides de control. Los resultados obtenidos indican que las siguientes hipótesis derivadas de la teoría financiera son aplicables para las firmas chilenas son la teoría del pecking order, la teoría del trade off, el motivo precautorio, y las economías de escala. Además, sugieren que la estructura corporativa afecta la decisión de acumular de efectivo. Específicamente, las variables: Business groups; empresa familiar controlada por Business groups; separación de derechos de voto y derechos de flujo de caja en empresa familiar; y derechos de flujo de caja en business groups están asociadas positivamente con los cash holdings, pudiendo ser explicado porque los controladores son más conservadores con la liquidez y presentan una mayor aversión a escenarios de restricciones presupuestarias o un aumento las reservas para futuras inversiones.

This research investigates 202 data breach events occurring between 2015 and 2019 and the related financial effects on the USA's impacted private firms. From examining previous research, it is obvious that no known studies evaluate the financial impacts of cybercrimes on private firms. Prior studies mostly focus on public firms and stock market reactions even though there is the increasing number of cyberattacks on private firms too. This study seeks to fill the gap by providing the empirical evidence of the impacts on those firms' cash holding after experiencing a cybersecurity attack. Overall, the results of this research show if the private firms that have been cyberattacked face the connate aftermath and follow the similar precautions as public firms with data breaches or not. I find that the firms that experienced an attack two years ago increase their cash holdings significantly, while an attack that happened a year ago can only impact cash holdings while interacting with tangibility and ROA of a firm. These results are essential as the private firms draw up a budget and reform strategies for coping with cyber incidents.

Yes / Exposure to political corruption and political uncertainty separately demands opposing risk management responses: to reduce cash to minimize expropriation and to increase cash to hedge policy risk. We study how local political corruption and political uncertainty interact in their impact on corporate cash holdings within the United States. We find robust evidence that firms located in states with higher corruption scores react to increases in local political uncertainty by increasing cash holdings more than those in less corrupt settings. This behavior suggests that firms in more corrupt settings find it expedient to raise cash to facilitate influence of officials in the face of local political risk. We find further support for this conclusion by showing that politically engaged firms respond to our measure of political risk by increasing cash and increasing spending on campaign contributions. Our findings point to a potential channel through which different jurisdictions experience the entrenchment and persistence of corruption.

This paper examines the role of labor leverage in determining cash held by companies on their balance sheets. Labor leverage is defined as an off-balance sheet intangible liability that is created by the fixed obligation for firms to pay wages to their workers. In this study, I analyze both unconstrained and constrained firms and find that the risk associated with labor leverage plays an important part on how much cash companies can hold. I find that unconstrained firms have higher levels of cash holdings to cover the labor leverage liability, while constrained firms are not able to hold cash because of their constrained nature. These results are robust to alternative specifications including and excluding industry and year dummies, as well as the use of firm fixed effects, and are mostly consistent across industries and over time.

Chief Executive Offier (CEO) characteristics, such as the level of risk aversion, are known to affect corporate financial policies, and therefore are likely to impact corporate liquidity decisions. We examine changes in cash holdings around CEO turnover events, a period in which discrete changes in managerial preferences and abilities are likely to have the most dramatic effect on cash holdings. Our results suggest that cash holdings increase significantly following forced departures. The increase is persistent over the successor's tenure and is robust to controls for the standard firm-level determinants of cash holdings and corporate governance characteristics. We find that higher cash holdings arise mainly through the management of net working capital, as opposed to asset sales or reductions in investment. This suggests that the changes are optimal for shareholders rather than an indication of serious agency problems. This conclusion is supported further by our finding that the marginal value of cash does not decrease following the turnover.

Corporate cash holdings is a topic constantly under review, companies hoarding cash are criticized by shareholders who rather have companies using their cash for new investments or dividend payouts. Recent academic research has discovered that levels of cash holding are high in times when risk is deemed to be high and found that levels of corporate cash holdings are substantially higher than they used to, making more coverage and a better understanding of the phenomenon crucial. This thesis is investigating an aspect of the interconnection between corporate cash holdings and shareholders by examining if there is a relationship between the level of corporate cash holdings and the risk of the company stock. This research is conducted on the Stockholm Stock Exchange during the four year period of 2009-2012 and investigates for a relationship not only on the entire stock exchange but also for each size and sector individually. In order to investigate this relationship a cash to assets ratio has been employed to represent the level of corporate cash holdings and the measures of stock beta and volatility are used to represent the risk of the stock. The cash holding ratio is tested for a relationship with both beta and volatility separately using the Spearman’s rank correlation coefficient. This thesis have adopted a quantitative research and implemented an archival research strategy by using official records and numbers. Through these statistical tests this thesis establishes significant relationships between both the cash holding ratio and stock beta and stock volatility separately for the entire stock exchange and some differences arises between different sizes and sectors. For cash holding and stock beta a negative correlation relationship has been discovered for the entire sample, the medium cap size and the health care and industrial sectors. For cash holdings and stock volatility positive correlation findings have been made for the entire sample as well as the small cap size and the sectors of basic materials, health care and technology. This finding implicates that cash holdings to some extent relates stock risk and several potential explanations to this relationship are given and connected to well-established financial theories.

Firms that face seasonal demand account for an important fraction of the U.S. economy. However, there is surprisingly little evidence on these firms' financing decisions. Yet, studying these decisions provides a natural setting to shed light on the types of capital (i.e. cash or debt) that firms use to manage short-term financing needs. Using seasonal firms as a setting to examine this issue, I show that seasonal financing needs are met with debt with low exposure to information asymmetry, such as short-term debt and trade credit. I further show that cash reserves, which have high carrying costs and can at time lead to agency problems, are not used for seasonal financing needs. Further, as financial flexibility theory would predict, I document that seasonal firms maintain more conservative financial policies to increase the ability to use debt for short-term financing needs. Specifically, seasonal firms are less levered and have long-term debt with a longer average maturity. Further, seasonal firms adjust toward leverage targets slower during fiscal quarters when debt is used for short-term financing. Overall, my findings indicate that firms minimize costs associated with short-term financing needs by using debt with low issuance costs and the use of this debt impacts the overall capital structure of the firm.