Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcasts
  • About Us
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Cold Call Podcast
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
    • Working Paper Summaries
  • Browse All
    • COVID-19 Business Impact Center
      COVID-19 Business Impact Center
      Firm Selection and Corporate Cash Holdings
      13 Jun 2016Working Paper Summaries

      Firm Selection and Corporate Cash Holdings

      by Juliane Begenau and Berardino Palazzo
      Over the last 30 years, firms have increased their cash holdings. This paper highlights the importance of an increasing share of R&D-intensive firms and more favorable IPO conditions. Both mechanisms help explain the increase in average cash-to-asset ratio for US public companies over three decades.
      LinkedIn
      Email

      Author Abstract

      The gradual replacement of traditional U.S. public companies by more R&D–intensive firms is key to understanding the secular trend in average cash holdings. Over the last 35 years, an increasing share of R&D–intensive firms has entered the stock market with progressively higher cash balances. This positive entry-effect dominates the negative within-firm effect post IPO. We build a firm industry model with endogenous entry to quantify the importance of two competing selection mechanisms: an increasing share of R&D–intensive firms in the overall economy and more favorable IPO conditions. Only the combination of both mechanisms successfully generates a sizable secular increase.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: May 2016
      • HBS Working Paper Number: 16-130
      • Faculty Unit(s): Finance
        Trending
          • 25 Feb 2019
          • Research & Ideas

          How Gender Stereotypes Kill a Woman’s Self-Confidence

          • 24 Oct 2016
          • Research & Ideas

          Bernie Madoff Explains Himself

          • 08 Mar 2021
          • In Practice

          COVID Killed the Traditional Workplace. What Should Companies Do Now?

          • 14 Apr 2021
          • Research & Ideas

          The High Cost of the Slow COVID Vaccine Rollout

          • 17 May 2017
          • Research & Ideas

          Minorities Who 'Whiten' Job Resumes Get More Interviews

      Find Related Articles
      • United States

      Sign up for our weekly newsletter

      Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
      ǁ
      Campus Map
      Harvard Business School Working Knowledge
      Baker Library | Bloomberg Center
      Soldiers Field
      Boston, MA 02163
      Email: Editor-in-Chief
      →Map & Directions
      →More Contact Information
      • Make a Gift
      • Site Map
      • Jobs
      • Harvard University
      • Trademarks
      • Policies
      • Digital Accessibility
      Copyright © President & Fellows of Harvard College