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Guariglia, Alessandra and Yang, Junhong (2018) 'Adjustment behavior of corporate cash holdings: the China experience.' European Journal of Finance, 24 (16). pp. 1428-1452.

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Using a panel of 1478 Chinese listed firms over the period 1998–2010, we examine the behavior of corporate cash holdings. Consistent with the trade-off theory, we document that Chinese firms tend to actively manage their cash balances toward a target level. We also observe a considerable heterogeneity in adjustment speeds of cash holdings across firms, due to the presence of different adjustment costs. Specifically, firms with a high level of excess cash, and firms that actively manage their cash balances through investment, dividend payments, and debt issuance, all display higher adjustment speeds. Finally, the institutional setting does not significantly affect adjustment speeds.

Item Type: Journal Article
Keywords: Cash holdings; trade-off theory; speed of adjustment; China
SOAS Departments & Centres: Departments and Subunits > School of Finance & Management
ISSN: 1351847X
Copyright Statement: © 2016 Informa UK Limited, trading as Taylor & Francis Group. This is an Accepted Manuscript of an article published by Taylor & Francis in European Journal of Finance on 16 Feb 2016, available online:
DOI (Digital Object Identifier):
Date Deposited: 20 Apr 2020 07:32

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