Finance professor Yixin Liu investigates the value of corporate cash holdings
According to Moody’s Investor Services, U.S. non-financial companies held about $1.7 trillion in cash in 2016. Corporate cash holdings have more than doubled in the last 10 years, attracting the attention of activist investors, the public and academics, alike.
Their concern?
“Many view cash hoards as controversial because they give managers leeway to invest, possibly in less productive activities,” said Paul College associate professor of finance Yixin Liu.
Studies have shown that markets react negatively to mergers and acquisitions announcements when the acquiring firm carries large amounts of cash.
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