Precautionary motives for private firms’ cash holdings

Valerio Potì, Pierpaolo Pattitoni and Barbara Petracci

International Review of Economics & Finance, 2020, vol. 68, issue C, 150-166

Abstract: In this paper, we focus on the precautionary motive for holding cash in private firms. We check novel implications of such motive that arise under conditions that are typical of private firms. Because of the incomplete separation of the finances of these firms from the finances of the owner, we also complement the traditional precautionary motive with a novel variant that considers stakeholders’ risk attitudes. We find empirical evidence consistent with both versions of the precautionary motive though some of the implications of the traditional precautionary motive, in the form of the hedging motive, are unsupported by the data.

Keywords: Cash holdings; Private firms; Precautionary motive; Financing policies (search for similar items in EconPapers)
JEL-codes: G11 G31 G32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056020300496
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:68:y:2020:i:c:p:150-166

DOI: 10.1016/j.iref.2020.03.003

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().