2 Tim Opler, Lee Pinkowitz, René Stulz, and Rohan
Williamson, “The Determinants and Implications of
CorporateCash Holdings,”Journal ofFinancialEconomics
52 (1999): 3–46.This paper examines thedeterminants of
cashholdingsandnotesthatmanyofthevariablesthatlead
companies to have low debt ratios (significant growth
opportunities, high risk) also lead to large cash balances.
3 M. H.Miller and D. Orr,“A Model ofthe Demand for
Moneyby Firms,”Quarterly Journalof Economics(1966):
413–435. Theydevelopa simple modelfor computing the
optimal operating cash balance, as a function of the
opportunitycost ofholdingcash andcash requirementsfor
operations.
4 M.Faulkender,“CashHoldingsamongSmallBusinesses,”
Workingpaper,Social Science ResearchNetwork (SSRN),
2002.Thispaperfindsthatthereareeconomiesofscaleand
that cash balances decrease as firms get bigger.
5 C.CustodioandC.Raposo,“CashHoldingsandBusiness
Conditions,”working paper,SSRN, 2004.This paperfinds
strongevidencethatfinanciallyconstrainedfirmsadjusttheir
cashbalancestoreflectoverallbusinessconditions,holding
morecash duringrecessions. Firmsthat arenotfinancially
constrainedalsoexhibitthesamepattern,butthelinkage is
muchweaker.Theirfindingsaresimilartothoseinanother
paper by C. F. Baum, M. Caglayan, N. Ozkan, and O.
Talvera,“TheImpactofMacroeconomicUncertaintyonCash
Holdingsfor Non-financialService Firms,”working paper,
SSRN, 2004.