| Περίληψη: | This thesis explores the association between cash holdings and
business strategy for non-financial US firms, over a period from 1970
to 2016. Miles and Snow’s (1978, 2003) typology is used to construct
the strategy index and explore the relation between strategies and
corporate liquidity. Thus, we distinguish two extreme corporate
strategies into Prospectors and Defenders, based on resource allocation
and investment behavior patterns. Following the methodology of Bates
et al. (2009) on cash holdings, data were analyzed using multiple
regression analysis. Initially, the results suggest that strategy affects
positively corporate liquidity. Regarding SOA, the estimated adjustment
coefficient from dynamic panel model is about 0.475, indicating that a
typical firm corrects a deviation from optimal cash holdings in 2,1 years
(47.5%). Furthermore, the deviation from target cash is higher for
Prospectors than Defenders, who adjust quicker to optimal cash levels.
We conclude that cash-holding adjustment speed for prospectors who
focus on innovation is slower than defenders, whose managers follow a
cost reduction and more conservative financial policy. Next, it was
applied a regression among firm value, capital structure and cash
holdings. This study investigates the market value of cash held by firms.
In general, we estimate the value of a marginal dollar of cash to be about
$0.97. However, a significant difference in the firm valuation of the
strategic types is found. In the sample of US non-financial and nonutility corporations, when firms’ excess cash holdings level is higher,
the firm value is lower. As a result, prospectors hold more cash than
defenders, that leads to a lower firm’s market value. The study
contributes both to the cash literature and management literature since
the core findings show that that strategic considerations are important
in shaping cash policies of innovative firms. Substantiating the dynamic
nature of business strategy and the optimal use of cash reserves
facilitate a healthier corporate performance.
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