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Nonlinear target adjustment in corporate liquidity management: an endogenous thresholds approach

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  • W. Allard Bruinshoofd
  • Clemens Kool

Abstract

We provide new empirical evidence on nonlinear liquidity management in Dutch firms. Our results reveal that liquidity adjustment from below the target is significantly faster than from above. We find no evidence for bands of inaction around the target.

Suggested Citation

  • W. Allard Bruinshoofd & Clemens Kool, 2009. "Nonlinear target adjustment in corporate liquidity management: an endogenous thresholds approach," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2125-2131.
    • Handle: RePEc:taf:applec:v:41:y:2009:i:17:p:2125-2131
    DOI: 10.1080/00036840701222587
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    References listed on IDEAS

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    1. W. Allard Bruinshoofd & Clemens J. M. Kool, 2004. "Dutch corporate liquidity mangement: New evidence on aggregation," Journal of Applied Economics, Universidad del CEMA, vol. 7, pages 195-230, November.
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    6. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
    7. Ono, Masanori, 2003. "A computational approach to liquidity-constrained firms over an infinite horizon," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 189-205, October.
    8. Heitor Almeida & Murillo Campello & Michael S. Weisbach, 2004. "The Cash Flow Sensitivity of Cash," Journal of Finance, American Finance Association, vol. 59(4), pages 1777-1804, August.
    9. Milne, Alistair & Robertson, Donald, 1996. "Firm behaviour under the threat of liquidation," Journal of Economic Dynamics and Control, Elsevier, vol. 20(8), pages 1427-1449, August.
    10. Kim, Chang-Soo & Mauer, David C. & Sherman, Ann E., 1998. "The Determinants of Corporate Liquidity: Theory and Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 33(3), pages 335-359, September.
    11. Ono, Masanori, 2003. "Erratum to "A computational approach to liquidity-constrained firms over an infinite horizon"," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 207-207, October.
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    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G3 - Financial Economics - - Corporate Finance and Governance

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