Cash holdings and financing decisions under ambiguity

Agliardi, Elettra ; Agliardi, Rossella ; Spanjers, Willem (2014) Cash holdings and financing decisions under ambiguity. Bologna: Dipartimento di Scienze economiche DSE, p. 22. DOI 10.6092/unibo/amsacta/4111. In: Quaderni - Working Paper DSE (979). ISSN 2282-6483.
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Abstract

This paper addresses the following unresolved questions: Why do some firms issue equity instead of debt? Why did most firms retain their cash holdings instead of distributing them as dividends in recent times? How do firms change their financing policies during a period of severe financial constraints and ambiguity, or when facing the threat of an unpredictable financial crisis? We analyze how the values of the firm’s equity and debt are affected by ambiguity. We also show that cash holdings are retained longer if the investors’ ambiguity aversion bias is sufficiently large, while cash holdings become less attractive when the combined impact of ambiguity and ambiguity aversion is relatively low.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Agliardi, Elettra
Agliardi, Rossella
Spanjers, Willem
Keywords
corporate finance decisions; ambiguity; cash holdings; optimal dividends
Subjects
ISSN
2282-6483
DOI
Deposit date
19 Nov 2014 09:52
Last modified
16 Mar 2015 14:07
URI

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