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Has the value of cash increased over time?
Author(s) -
Chung JiWoong,
Jung Boochun,
Park Duri
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12425
Subject(s) - cash on cash return , cash and cash equivalents , cash flow statement , operating cash flow , cash , valuation (finance) , business , cash management , cash flow forecasting , cash flow , liberian dollar , monetary economics , market value , terminal value , shareholder , cash conversion cycle , economics , finance , corporate governance
We document a dramatic increase in the market valuation of cash holdings of US firms from 1988 to 2013. The value of one dollar of cash has increased by $0.019 per year during the period, indicating that shareholders place more value on cash in recent years. We also find that the increasing trend in cash value is driven mainly by increases in institutional shareholdings and accounting conservatism. We further decompose cash change into cash flows from operation ( CFO ) and cash flows from investing and financing activities, and find that CFO is a significant driver of the increasing trend in cash value.