Format:
1 Online-Ressource (28 p)
Content:
Agency theory suggests that firms with very high cash balances (quot;cash hoardersquot;) are likely to misinvest their funds. However, if investors do not fully recognize the implications of a high cash balance, then future returns may be predictable for cash hoarding firms. We find that these firms significantly underperform over the two years following their identification as hoarding. Contemporaneous returns are significantly negative in the year that a prior cash-hoarding firm reports a significant decrease in cash. Our results suggest that investors do not fully appreciate the implications of a high cash balance for future returns, but do recognize problems when that cash is subsequently spent
Note:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 20, 2005 erstellt
Language:
Undetermined
