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Has the value of cash increased over time?

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  • Ji‐Woong Chung
  • Boochun Jung
  • Duri Park

Abstract

We document a dramatic increase in the market valuation of cash holdings of US firms from 1988 to 2013. The value of one dollar of cash has increased by $0.019 per year during the period, indicating that shareholders place more value on cash in recent years. We also find that the increasing trend in cash value is driven mainly by increases in institutional shareholdings and accounting conservatism. We further decompose cash change into cash flows from operation (CFO) and cash flows from investing and financing activities, and find that CFO is a significant driver of the increasing trend in cash value.

Suggested Citation

  • Ji‐Woong Chung & Boochun Jung & Duri Park, 2020. "Has the value of cash increased over time?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(3), pages 2263-2299, September.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:3:p:2263-2299
    DOI: 10.1111/acfi.12425
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