An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry Perspective
The value of a company’s cash holdings is currently a hot issue in corporate finance research. Current studies have not reached a unified conclusion. Moreover, no one has ever studied that from the perspective of information asymmetry. However, there still exist disputes about the measurement of the...
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| Format: | Article |
| Language: | English |
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Wiley
2014-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2014/897278 |
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| _version_ | 1832568087632674816 |
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| author | Chuangxia Huang Xin Ma Qiujun Lan |
| author_facet | Chuangxia Huang Xin Ma Qiujun Lan |
| author_sort | Chuangxia Huang |
| collection | DOAJ |
| description | The value of a company’s cash holdings is currently a hot issue in corporate finance research. Current studies have not reached a unified conclusion. Moreover, no one has ever studied that from the perspective of information asymmetry. However, there still exist disputes about the measurement of the degree of information asymmetry. Previous studies mostly adopt single index to analysis this issue, and the economic meaning it represents only reflects some information of asymmetric information, so it was one-sided and the conclusion also differ. Drawing on the market microstructure and the index of information asymmetry of managers and investors, this paper constructs a new proxy for information asymmetry based on the principal component analysis. We find that a company’s value of cash holdings decreases increasingly with its level of information asymmetry, and the relationship between information asymmetry and the value of cash holdings is nonlinear. |
| format | Article |
| id | doaj-art-8bddad5f407b483a85d1dcfac51ee9a8 |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2014-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-8bddad5f407b483a85d1dcfac51ee9a82025-02-03T00:59:49ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2014-01-01201410.1155/2014/897278897278An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry PerspectiveChuangxia Huang0Xin Ma1Qiujun Lan2School of Mathematics and Computing Science, Changsha University of Science and Technology, Changsha 410004, ChinaSchool of Economics and Management, Changsha University of Science and Technology, Changsha 410114, ChinaSchool of Business, Hunan University, Changsha 410082, ChinaThe value of a company’s cash holdings is currently a hot issue in corporate finance research. Current studies have not reached a unified conclusion. Moreover, no one has ever studied that from the perspective of information asymmetry. However, there still exist disputes about the measurement of the degree of information asymmetry. Previous studies mostly adopt single index to analysis this issue, and the economic meaning it represents only reflects some information of asymmetric information, so it was one-sided and the conclusion also differ. Drawing on the market microstructure and the index of information asymmetry of managers and investors, this paper constructs a new proxy for information asymmetry based on the principal component analysis. We find that a company’s value of cash holdings decreases increasingly with its level of information asymmetry, and the relationship between information asymmetry and the value of cash holdings is nonlinear.http://dx.doi.org/10.1155/2014/897278 |
| spellingShingle | Chuangxia Huang Xin Ma Qiujun Lan An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry Perspective Discrete Dynamics in Nature and Society |
| title | An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry Perspective |
| title_full | An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry Perspective |
| title_fullStr | An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry Perspective |
| title_full_unstemmed | An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry Perspective |
| title_short | An Empirical Study on Listed Company’s Value of Cash Holdings: An Information Asymmetry Perspective |
| title_sort | empirical study on listed company s value of cash holdings an information asymmetry perspective |
| url | http://dx.doi.org/10.1155/2014/897278 |
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