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Corporate Liquidity And Nber Recession Announcements

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  • Anna‐Leigh Stone
  • Benton E. Gup

Abstract

Using announcement memos released by the National Bureau of Economic Research (NBER), we show that corporations increase liquidity during the quarter the NBER announces a peak in the business cycle. This reaction is primarily restricted to memos about peaks in the business cycle, whether it is a preliminary announcement or an official confirmation. Federal Open Market Committee and other monetary policy news, real‐time data releases, and tightening credit conditions do not drive the increase. This finding adds to the precautionary cash holdings literature by suggesting that corporations adjust liquidity not necessarily before recessions, but upon confirmation of a recession.

Suggested Citation

  • Anna‐Leigh Stone & Benton E. Gup, 2019. "Corporate Liquidity And Nber Recession Announcements," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 42(3), pages 637-669, September.
  • Handle: RePEc:bla:jfnres:v:42:y:2019:i:3:p:637-669
    DOI: 10.1111/jfir.12191
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    Cited by:

    1. Halil D. Kaya, 2021. "The Impact Of Business Conditions On Retailers And Wholesalers: Does Leverage Matter?," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 72-83, August.
    2. James Ming Chen & Mobeen Ur Rehman, 2021. "A Pattern New in Every Moment: The Temporal Clustering of Markets for Crude Oil, Refined Fuels, and Other Commodities," Energies, MDPI, vol. 14(19), pages 1-58, September.

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