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Nonprofit Cash Holdings

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  • Andres Ramirez

Abstract

This study examines the determinants and implications of nonprofit cash holdings. Based on agency theory and traditional literature of cash holdings, the author develop and test a number of predictions about nonprofit cash holdings. Several important findings can be highlighted. Nonprofit cash holdings do not seem to be detrimental to nonprofits; in fact, their levels can be explained with traditional precautionary and speculative motives. Additionally, governance and managerial proxies indicate that nonprofit cash holdings may not be a function of agency problems. Consistent with a harmless interpretation of cash holdings, nonprofits with higher excess cash tend to invest more in land, buildings, and equipment than those that hold less cash. Finally, donors do not penalize organizations that hold high levels of cash.

Suggested Citation

  • Andres Ramirez, 2011. "Nonprofit Cash Holdings," Public Finance Review, , vol. 39(5), pages 653-681, September.
    • Handle: RePEc:sae:pubfin:v:39:y:2011:i:5:p:653-681
    DOI: 10.1177/1091142110381638
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    References listed on IDEAS

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    Cited by:

    1. Thad D. Calabrese & Anubhav Gupta, 2019. "A Replication of “Agency Problems of Excess Endowment Holdings in Not-for-profit Firms†(Journal of Accounting and Economics, 2006)," Public Finance Review, , vol. 47(4), pages 747-774, July.
    2. David Adeabah & Charles Andoh & Simplice A. Asongu & Isaac Akomea-Frimpong, 2021. "Elections, Political Connections and Cash Holdings: Evidence from Local Assemblies," Working Papers of the African Governance and Development Institute. 21/004, African Governance and Development Institute..
    3. Michael L. Hand & Kawika Pierson & Fred Thompson, 2016. "A Replication Study of “Why Do Cities Hoard Cash?†(The Accounting Review 2009)," Public Finance Review, , vol. 44(5), pages 681-687, September.

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