IDEAS home Printed from https://ideas.repec.org/a/eee/revfin/v19y2010i4p192-193.html

The impact of macroeconomic uncertainty on non-financial firms' demand for liquidity: A note

Author

Listed:
  • Dai, Jie

Abstract

In an influential article, Baum et al. (2006) proposed a novel approach to dealing with uncertainty through conditional variability, as reflected in their Eq. (C.6) of the article. This crucial result in their Eq. (C.6) is, however, incorrect. In this Note, I provide a derivation for the correct result and perform numerical evaluations.

Suggested Citation

  • Dai, Jie, 2010. "The impact of macroeconomic uncertainty on non-financial firms' demand for liquidity: A note," Review of Financial Economics, Elsevier, vol. 19(4), pages 192-193, October.
    • Handle: RePEc:eee:revfin:v:19:y:2010:i:4:p:192-193
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1058-3300(10)00035-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Christopher F. Baum & Mustafa Caglayan & Neslihan Ozkan & Oleksandr Talavera, 2006. "The impact of macroeconomic uncertainty on non‐financial firms' demand for liquidity," Review of Financial Economics, John Wiley & Sons, vol. 15(4), pages 289-304.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mu-Shun Wang & Shaio Yan Huang & An An Chiu, 2011. "Liquidity, Management Effort And Performance," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(1), pages 1-14.
    2. Christopher F. Baum & Andreas Stephan & Oleksandr Talavera, 2009. "The Effects Of Uncertainty On The Leverage Of Nonfinancial Firms," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 216-225, April.
    3. Nusrat Jahan, 2022. "Macroeconomic Determinants of Corporate Credit Spreads: Evidence from Canada," Carleton Economic Papers 22-07, Carleton University, Department of Economics.
    4. Chu, Baoju & Dong, Yizhe & Liu, Yaorong & Ma, Diandian & Wang, Tianju, 2024. "Does China's emission trading scheme affect corporate financial performance: Evidence from a quasi-natural experiment," Economic Modelling, Elsevier, vol. 132(C).
    5. Abdul Rashid & Maryam Ashfaq, 2017. "Financial Constraints And Corporate Cash Holdings: An Empirical Analysis Using Firm Level Data," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 12(02), pages 1-26, June.
    6. Chow, Yee Peng & Muhammad, Junaina & Bany-Ariffin, A.N. & Cheng, Fan Fah, 2019. "Macroeconomic Uncertainty and Corporate Capital Structure: Evidence from the Asia Pacific Region," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(2), pages 99-122.
    7. Pei-Tha Gan, 2019. "Correction to: Economic uncertainty, precautionary motive and the augmented form of money demand function," Evolutionary and Institutional Economics Review, Springer, vol. 16(2), pages 425-425, December.
    8. Christopher F. Baum & Dorothea Schäfer & Oleksandr Talavera, 2006. "The Effects of Industry-Level Uncertainty on Cash Holdings: The Case of Germany," Discussion Papers of DIW Berlin 638, DIW Berlin, German Institute for Economic Research.
    9. Lee, Chien-Chiang & Lee, Chi-Chuan & Zeng, Jhih-Hong & Hsu, Yu-Ling, 2017. "Peer bank behavior, economic policy uncertainty, and leverage decision of financial institutions," Journal of Financial Stability, Elsevier, vol. 30(C), pages 79-91.
    10. Demir, Ender & Ersan, Oguz, 2017. "Economic policy uncertainty and cash holdings: Evidence from BRIC countries," Emerging Markets Review, Elsevier, vol. 33(C), pages 189-200.
    11. Mohammad Sharik Essa & Evangelos Giouvris, 2020. "Oil Price, Oil Price Implied Volatility (OVX) and Illiquidity Premiums in the US: (A)symmetry and the Impact of Macroeconomic Factors," JRFM, MDPI, vol. 13(4), pages 1-40, April.
    12. Christos Floros & Emilios Galariotis & Konstantinos Gkillas & Efstathios Magerakis & Constantin Zopounidis, 2024. "Time-varying firm cash holding and economic policy uncertainty nexus: a quantile regression approach," Annals of Operations Research, Springer, vol. 341(2), pages 859-895, October.
    13. Christopher F. Baum & Atreya Chakraborty & Liyan Han & Boyan Liu, 2012. "The effects of uncertainty and corporate governance on firms’ demand for liquidity," Applied Economics, Taylor & Francis Journals, vol. 44(4), pages 515-525, February.
    14. Dewangan, Shobhana & Kannadhasan, M., 2025. "Analyzing the impact of sustainable performance on working capital management: Evidence from emerging markets," Pacific-Basin Finance Journal, Elsevier, vol. 92(C).
    15. Bigelli, Marco & Sánchez-Vidal, Javier, 2012. "Cash holdings in private firms," Journal of Banking & Finance, Elsevier, vol. 36(1), pages 26-35.
    16. Liu, Shulin & Wang, Xianbin & Huang, Liangxiong, 2025. "Economic growth target fluctuation and bond issuance by LGFVs," International Review of Economics & Finance, Elsevier, vol. 98(C).
    17. Fryderyk Mirota & Natalia Nehrebecka, 2018. "Determinanty transakcyjnej rezerwy płynności w spółkach giełdowych w Polsce," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 75-102.
    18. Liu, Hongkui & Yu, Jiasheng & Tang, Guohao & Chen, Jian, 2025. "External trade policy uncertainty, corporate risk exposure, and stock market volatility," China Economic Review, Elsevier, vol. 89(C).
    19. William Hankins & Chak Cheng & Jeremy Chiu & Anna-Leigh Stone, 2016. "Does partisan conflict impact the cash holdings of firms? A sign restrictions approach," Bank of England working papers 638, Bank of England.
    20. Silva Manoel, Aviner Augusto & Moraes, Marcelo Botelho da Costa & Lopes Santos, David Ferreira & Fava Never, Marcos, . "Determinants of corporate cash holdings in times of crisis: insights from Brazilian sugarcane industry private firms," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(2).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:revfin:v:19:y:2010:i:4:p:192-193. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620170 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.