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A Granular Look into Firms’ Cash Portfolios

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  • Youngsuk Yook

Abstract

This paper uses confidential Census data to provide a granular look into the U.S. firms’ cash holding portfolios encompassing nearly four decades. The data provide information on short-term investment securities held in the portfolios, such as time deposits, commercial paper and government securities in addition to cash. The security-level information reveals that portfolios of the same size can have very different levels of liquidity and riskiness as the composition of securities varies considerably across firms and over time. Firms with strong precautionary motives tend to allocate more toward relatively more liquid and less risky securities. Firms actively rebalance their portfolios in response to changing economic conditions or idiosyncratic shocks to securities they hold. Event studies using shocks to Treasury securities and commercial paper shows firms shifting away from affected securities and simultaneously adjusting weights of other securities.

Suggested Citation

  • Youngsuk Yook, 2025. "A Granular Look into Firms’ Cash Portfolios," Working Papers 25-02, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:25-02
    as

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    File URL: https://www2.census.gov/library/working-papers/2025/adrm/ces/CES-WP-25-02.pdf
    File Function: First version, 2025
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Cash management; liquid assets; short-term investment securities;
    All these keywords.

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