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Dissertation by Chang Liu.pdf (1.02 MB)

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Two essays on corporate liquidity management

Liu, Chang
http://rave.ohiolink.edu/etdc/view?acc_num=kent1525891031065629

Abstract Details

2018, PHD, Kent State University, College of Business and Entrepreneurship, Ambassador Crawford / Department of Finance.
My dissertation contains two essays regarding corporate liquidity management. In the first essay, we find that personal connections between borrowers and lenders have a significant impact on the choice of corporate liquidity. Connected firms tend to obtain larger credit lines and hold less cash. Closer personal ties result in easier access to credit lines during economic shocks, such as financial crisis and negative news of credit quality. In addition, connections help firms with tighter financial constraints or higher risk obtain larger amount of credit lines. Connections also increase the amount of credit lines of borrowers with less public debt. Overall, our findings suggest that reduced asymmetric information between borrowers and lenders can improve corporate liquidity management. In the second essay, we study the relationship between corporate liquidity choice and market value by using the market-to-book decomposition of Rhodes-Kropf, Robinson, and Viswanathan (2005). We find that sector overvaluation or long-run growth usually increase the portion of cash in the total corporate liquidity. The effect is stronger in firms with larger growth opportunities, better corporate governance, or longer investor horizons. Moreover, the choice between cash and credit lines for firms without credit ratings are more sensitive to the sector overvaluation or long-run growth. In addition, we find sector error and long-run growth have stronger effects on corporate liquidity in the long horizons.
Xiaoling Pu (Committee Chair)
John Thornton (Committee Member)
Dandan Liu (Committee Member)
Finance
network liquidity market-to-book ratio

Recommended Citations

Citations

  • Liu, C. (2018). Two essays on corporate liquidity management [Doctoral dissertation, Kent State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=kent1525891031065629

    APA Style (7th edition)

  • Liu, Chang. Two essays on corporate liquidity management. 2018. Kent State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=kent1525891031065629.

    MLA Style (8th edition)

  • Liu, Chang. "Two essays on corporate liquidity management." Doctoral dissertation, Kent State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=kent1525891031065629

    Chicago Manual of Style (17th edition)

kent1525891031065629
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© 2018, all rights reserved.
This open access ETD is published by Kent State University and OhioLINK.