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Cash Holdings, Firm Value and the Role of Market Imperfections. A Cross Country Analysis

In: The Economics of Imperfect Markets


  • Giorgio Calcagnini

    (Università di Urbino “Carlo Bo”)

  • Adam Gehr

    (DePaul University)

  • Germana Giombini

    (Università di Urbino “Carlo Bo”)


In this paper we evaluate the empirical importance of the contemporaneous presence of financial and labor market imperfections by studying cross-country differences in market valuations of listed companies and firms’ cash holdings. Our results show that, as expected, financial market imperfections are positively correlated with firms’ cash holdings and that the latter are larger wherever employment protection laws (EPL) are stricter. Moreover, stock markets value liquid companies less in economies with higher EPL levels.

Suggested Citation

  • Giorgio Calcagnini & Adam Gehr & Germana Giombini, 2010. "Cash Holdings, Firm Value and the Role of Market Imperfections. A Cross Country Analysis," Contributions to Economics, in: Giorgio Calcagnini & Enrico Saltari (ed.), The Economics of Imperfect Markets, chapter 0, pages 51-71, Springer.
  • Handle: RePEc:spr:conchp:978-3-7908-2131-4_3
    DOI: 10.1007/978-3-7908-2131-4_3

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