6 D.Haushalter,S.Klasa,andW.F.Maxwell,“TheInfluence
ofProduct MarketDynamicsontheFirm’sCash Holdings
andHedgingBehavior,”workingpaper,SSRN,2005.Inthis
paper,theauthorsfindevidencethatfirmsthatsharegrowth
opportunitieswithstrongrivalsaremorelikelytoaccumulate
highercash balances, and thatthesecash holdings provide
strategic benefits to the firms.
7 V. Acharya, H. Almeida, and M. Campello, “Is Cash
Negative Debt? A Hedging Perspective on Corporate
FinancialPolicies,”workingpaper,SSRN,2005.Theauthors
presentatwistonthisargumentbynotingthatfirmsthathave
to make significant investments when their operating cash
flowsarelow,whichtheycategorizeasahedgingneed,will
maintain much larger cash balances to cover these
investments.
8 Lee Pinkowitzand Rohan Williamson, “Bank Powerand
CashHoldings:EvidencefromJapan,”ReviewofFinancial
Studies 14 (2001):1059–1082.Theycomparecashholdings
of firms in Japan, Germany, and the United States and
concludethatthemedianJapanesefirmholdstwoandahalf
timesmorecashthanthemedianGermanorU.S.firm.They
hypothesize (and provide evidence)that thesehigher cash
balancesreflectbanksextractingrentsfromJapanesefirmsby
forcingthemtoholdmorecashthantheyneed.Inparticular,
they note that cash balances in Japan were higher during
periods of high bank power.
9 S. Myers and N. Majluf, “Corporate Financing and
Investment Decisions When Firms Have Information That
InvestorsDoNotHave,”JournalofFinancialEconomics 13
(1984): 187–221.