|
|||||
|
|
Product market competition and the value of corporate cash: Evidence from trade liberalization |
|
| Institution: | 1. Department of Money and Banking, College of Commerce, National Chengchi University, Taiwan;2. Department of Finance, College of Business, Chung Yuan Christian University, Taiwan;3. Department of Finance, College of Commerce, National Chengchi University, Taiwan;4. Risk and Insurance Research Center, College of Commerce, National Chengchi University, Taiwan;1. Kent State University, Department of Accounting, College of Business Administration, P.O. Box 5190, Kent, OH 44242-0001, United States;2. Wake Forest University, Schools of Business, P.O. Box 7659, Winston-Salem, NC 27109, United States;1. Independent Researcher;2. University of Southern Denmark, Danish Finance Institute, Campusvej 55, 5230 Odense M, Denmark |
| Abstract: | This paper uses the 1989 Canada–U.S. Free Trade Agreement as a source of exogenous variation in product markets to establish the impact of increased competition on the market valuation of corporate cash reserves. I find that the trade liberalization leads to a significant increase in the value of cash for firms experiencing a larger shock to their competitive environment. The impact of the trade liberalization is stronger among firms that face greater risk of losing investment opportunities to rivals. I also show that these inferences about the valuation effect of competition apply more broadly to a large sample of firms. |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ | |