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The effects of cash holdings on corporate performance during a credit crunch: evidence from the sub-prime mortgage crisis

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  • Frederick Adjei

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Abstract

We examine the effects of firms’ cash positions in moderating the impact of the subprime mortgage crisis on corporate performance. We find that corporate performance significantly declines following the onset of the crisis. Firms with low cash reserves had the largest declines in performance following the onset of the financial crisis. However, we do not find any differences in performance decline following the onset of the crisis, when we compare financially constrained firms to financially unconstrained firms. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Frederick Adjei, 2013. "The effects of cash holdings on corporate performance during a credit crunch: evidence from the sub-prime mortgage crisis," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(2), pages 188-199, April.
  • Handle: RePEc:spr:jecfin:v:37:y:2013:i:2:p:188-199 DOI: 10.1007/s12197-011-9177-8
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    References listed on IDEAS

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    Keywords

    Cash Reserves; Subprime Mortgage; Crisis; Value; G21; G30;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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