تعدیل سرعت دارایی های نقدی Cash holdings speed of adjustment

1. Introduction Increases in the level of corporate cash holdings over the past decade have attracted considerable attention from media, investors and academic researchers. Bates, Kahle, and Stulz, (2009, p.1985), note that “cash-to-assets ratio for U.S. industrial firms more than doubles from 1980 to 2006,” and that starting from 2003, “the average firm can retire all debt obligations with its cash holdings.” In light of these findings, the topic of cash holdings management has become increasingly important, potentially deserving the same attention as capital structure management. The recent financial downturn and liquidity crisis further emphasized the importance of liquidity management, and added another angle to the debate on the optimal level of corporate cash holdings. The level of corporate cash holdings and the factors that explain it have been the subject of considerable recent research (e.g. Opler, Pinkowitz, Stulz and Williamson, 1999; Dittmar, Mahrt- Smith, Servaes, 2003; Foley, Hartzell, Titman, and Twite, 2007; Bates, Kahle, and Stulz, 2009). But cross-sectional examination of cash holdings addresses only one aspect of cash management. Understanding the dynamic aspects of cash holdings is also important as it provides a more complete understanding of cash management policy. Specifically, answers to questions such as whether firms have and operate with target cash holdings in mind, whether managers adjust cash holdings towards such targets, and what factors influence the speed of such adjustments are all important aspects of cash holdings that are not well-understood. Only a few papers focus on the dynamic aspects of cash holdings (Dittmar and Duchin, 2011; Venkiteshwaran, 2011; Gao, Harford and Li, 2013; Bates, Chang and Chi, 2017). Our study contributes to this emerging literature. Following the seminal paper by Opler, Pinkowitz, Stulz and Williamson (1999), several studies examine cash holdings from the perspective of the theories developed to explain corporate capital structure including: trade-off, agency, financial hierarchy, and market timing theories (e.g. Dittmar et al., 2003; Venkiteshwaran, 2011; Dittmar and Duchin, 2011; Gao, Harford and Li, 2013; Bates, Chang and Chi, 2017). As in the case of research into capital structure, the trade-off model has garnered the most attention when it comes to investigating cash holdings. In the trade-off theory framework, managers of a firm balance the cost and benefits of holding cash to determine an optimal (target) level of cash that should be maintained in order to maximize shareholders’ wealth. As in the case of studies on capital structure, one way to test for the existence of an optimal (target) level of cash holdings is to see if, and how quickly, firms move back to their target cash holdings level over time (i.e., speed of adjustment (SOA)). A high SOA estimate (close to 1.0) would support the static version of the trade-off theory of cash holdings, which assumes immediate adjustment towards target of cash holdings, while CH-SOA estimates lower than 1.0, albeit significant, would support the dynamic version of the trade-off theory. The latter recognizes that due to various market frictions and adjustment costs, the immediate full adjustment is not always possible and adjusting towards target takes time.