Inflation, operating cycle, and cash holdings

• 作者: Chunlei Song Xu Chen Yanchao Wang Yu Ji
• 来源期刊: 中国会计学刊：英文版
• 学科: 经济
• 关键词: INFLATION Operating CYCLE CASH HOLDINGS
• 年，卷（期）: zghjxkywb_2014,（4）
• 页码范围: 263-276
• 页数: 14页
• 分类号: F275.1

摘要

A corporate cash-holding strategy is a trade-off between the costs and benefits of holding cash.At the macrolevel,firms are inclined to adjust and optimize their cash-holding strategies in response to changes in purchasing power due to inflation.At the microlevel,the operating cycle,which indicates the speed and turnover of corporate cash flow,also influences the corporate cash-holding strategy.Firms flexibly adjust their cash-holding strategies in response to changes in the internal and external environment,which is referred to as the cash adjustment strategy.We examine these predicted relationships using a sample of listed firms in China’s stock market over the 1998–2009 period.Consistent with our predictions,the empirical results indicate a significant negative association between cash holdings and the CPI,but the relationship is reversed when the CPI reaches a certain level.There is also a U-shaped relationship between operating cycle and cash holdings,and this relationship is similarly influenced by changes in the inflation level.In examining the macroeconomic environment and microlevel firm-specific characteristics simultaneously,our findings supplement the literature on firms’cash-holding strategies and provide theoretical and practical implications.