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Three Essays on Corporate Cash Holdings

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2017, PhD, University of Cincinnati, Business: Business Administration.
In corporate finance, the pecking order theory suggests that firms raise capital according to the following preference order: internal funds, debt, and then equity. The most liquid corporate assets are cash holdings. Companies also use cash to pay cash dividends. How do companies manage their cash holdings? In Chapter 1, I investigate equity issuances through Dividend Reinvestment and Stock Purchase Plans (DRSPPs). These plans help companies retain cash that are used to pay out in the form of dividends. My findings provide direct evidence showing that the Pecking Order drives firms’ financing. In Chapter 2, I investigate whether the payout choice of firms is influenced by the presence of a Dividend Reinvestment Plan (DRIP). Agency Theory and/or the Signaling Model suggest that dividend-paying firms with a DRIP will use a conservative payout policy in order to incentivize shareholders to make long-term investments. In Chapter 3, I provide further evidence on the relation between cash holdings, risk, and expected returns. I show that the cash holding premium is driven by firms’ underlying risk and growth opportunities, a finding consistent with an existing theory model.
Shaun Bond, Ph.D. (Committee Chair)
Alexander Borisov (Committee Member)
Brian Hatch, Ph.D. (Committee Member)
Peng Wang, Ph.D. (Committee Member)
136 p.

Recommended Citations

Citations

  • Zheng, S. (2017). Three Essays on Corporate Cash Holdings [Doctoral dissertation, University of Cincinnati]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=ucin1505131298762038

    APA Style (7th edition)

  • Zheng, Suyan. Three Essays on Corporate Cash Holdings. 2017. University of Cincinnati, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=ucin1505131298762038.

    MLA Style (8th edition)

  • Zheng, Suyan. "Three Essays on Corporate Cash Holdings." Doctoral dissertation, University of Cincinnati, 2017. http://rave.ohiolink.edu/etdc/view?acc_num=ucin1505131298762038

    Chicago Manual of Style (17th edition)