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Employment stability and corporate cash holdings
- Authors
- Han, Syungjin; Kim, Changhyun
- Issue Date
- 1-Jan-2022
- Publisher
- ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
- Keywords
- Cash holdings; employment stability; job security; implicit contract
- Citation
- APPLIED ECONOMICS LETTERS, v.29, no.21, pp.1991 - 1995
- Journal Title
- APPLIED ECONOMICS LETTERS
- Volume
- 29
- Number
- 21
- Start Page
- 1991
- End Page
- 1995
- ISSN
- 1350-4851
- Abstract
- This paper investigates how a firm's employment stability affects the level of its cash holdings. We find that firms with high employment stability (as measured by one minus a firm's employment elasticity with respect to its sales) maintain large cash holdings. The positive effect of employment stability on cash holdings is stronger for R&D intensive firms and firms with high firm-specific human capital. These results are consistent with theories predicting that firms hold cash to signal the credibility of their employment policies regarding job security.
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Related Researcher
- Han, Syung Jin
- Business Administration (Business Administration)