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- Publisher Website: 10.1016/j.jcorpfin.2014.08.004
- Scopus: eid_2-s2.0-84908419799
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Article: The value of financial flexibility and corporate financial policy
Title | The value of financial flexibility and corporate financial policy |
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Authors | |
Keywords | Payout policy Capital structure Cash holdings Financial flexibility |
Issue Date | 2014 |
Citation | Journal of Corporate Finance, 2014, v. 29, p. 288-302 How to Cite? |
Abstract | © 2014 Elsevier B.V. We propose a novel approach to measure the value that shareholders assign to financial flexibility. In contrast to existing proxies for financial constraints, our measure is market-based, forward-looking and not directly influenced by past financial decisions. We find that firms for which shareholders consider financial flexibility more valuable have lower dividend payouts, prefer share repurchases to dividends, and exhibit lower leverage ratios. Moreover, these firms tend to accumulate more cash. Our analysis contributes to the growing literature on financial flexibility and indicates that-in line with prior survey evidence-financial flexibility considerations shape corporate financial policy. |
Persistent Identifier | http://hdl.handle.net/10722/210136 |
ISSN | 2023 Impact Factor: 7.2 2023 SCImago Journal Rankings: 3.182 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Rapp, Marc Steffen | - |
dc.contributor.author | Schmid, Thomas | - |
dc.contributor.author | Urban, Daniel | - |
dc.date.accessioned | 2015-05-22T06:06:44Z | - |
dc.date.available | 2015-05-22T06:06:44Z | - |
dc.date.issued | 2014 | - |
dc.identifier.citation | Journal of Corporate Finance, 2014, v. 29, p. 288-302 | - |
dc.identifier.issn | 0929-1199 | - |
dc.identifier.uri | http://hdl.handle.net/10722/210136 | - |
dc.description.abstract | © 2014 Elsevier B.V. We propose a novel approach to measure the value that shareholders assign to financial flexibility. In contrast to existing proxies for financial constraints, our measure is market-based, forward-looking and not directly influenced by past financial decisions. We find that firms for which shareholders consider financial flexibility more valuable have lower dividend payouts, prefer share repurchases to dividends, and exhibit lower leverage ratios. Moreover, these firms tend to accumulate more cash. Our analysis contributes to the growing literature on financial flexibility and indicates that-in line with prior survey evidence-financial flexibility considerations shape corporate financial policy. | - |
dc.language | eng | - |
dc.relation.ispartof | Journal of Corporate Finance | - |
dc.subject | Payout policy | - |
dc.subject | Capital structure | - |
dc.subject | Cash holdings | - |
dc.subject | Financial flexibility | - |
dc.title | The value of financial flexibility and corporate financial policy | - |
dc.type | Article | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1016/j.jcorpfin.2014.08.004 | - |
dc.identifier.scopus | eid_2-s2.0-84908419799 | - |
dc.identifier.volume | 29 | - |
dc.identifier.spage | 288 | - |
dc.identifier.epage | 302 | - |
dc.identifier.isi | WOS:000347265500016 | - |
dc.identifier.issnl | 0929-1199 | - |