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CASH HOLDINGS AND CORPORATE DIVERSIFICATION
by
Ran Duchin
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(BUSINESS ADMINISTRATION)
May 2008
Copyright 2008 Ran Duchin
Object Description
| Title | Cash holdings and corporate diversification |
| Author | Duchin, Ran |
| Author email | duchin@usc.edu |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Business Administration |
| School | Marshall School of Business |
| Date defended/completed | 2008-03-25 |
| Date submitted | 2008 |
| Restricted until | Unrestricted |
| Date published | 2008-05-06 |
| Advisor (committee member) |
DeAngelo, Harry Officer, Micah Ozbas, Oguzhan Sensoy, Berk James, Gareth |
| Abstract | This study documents a strong connection between corporate cash holdings and organization form, and explores why such a relation exists. Over the period 1990-2004, U.S. multi-division firms held 39 percent less cash as a fraction of assets than stand-alone firms, and the difference persists after controlling for firm size, capital structure, cash flows, growth opportunities and investments. To explain the difference, I study the determinants of cash holdings in a sample of 10,380 firms over 1990-2004 and find that (a) correlations between divisional cash flows or investment opportunities completely explain the relation between cash holdings and organization form and (b) their effect is big: an increase of one standard deviation in the correlations between cash flows (investment opportunities) implies an increase of 13 percent (10 percent) in cash holdings of the average firm. This suggests that corporate diversification can serve as a way to economize on cash. The paper also documents a substantial increase in average cross-divisional correlations from 1990 to 2004, which might explain why diversified firms hold more cash than they used to. |
| Keyword | cash; diversification; liquidity; cross-divisional correlation |
| Geographic subject (country) | USA |
| Coverage date | circa 1990/2004 |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Type | texts |
| Legacy record ID | usctheses-m1230 |
| Rights | Duchin, Ran |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | http://www.usc.edu/isd/libraries/services/ask_a_librarian/email/ |
| Filename | etd-Duchin-20080506 |
| Archival file | uscthesesreloadpub_Volume17/etd-Duchin-20080506.pdf |
Description
| Title | Page 1 |
| Full text | CASH HOLDINGS AND CORPORATE DIVERSIFICATION by Ran Duchin A Dissertation Presented to the FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree DOCTOR OF PHILOSOPHY (BUSINESS ADMINISTRATION) May 2008 Copyright 2008 Ran Duchin |
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