Reference : Accruals Quality, Financial Constraints and Corporate Cash Holdings
Scientific congresses, symposiums and conference proceedings : Unpublished conference
Business & economic sciences : Accounting & auditing
Accruals Quality, Financial Constraints and Corporate Cash Holdings
Derouiche, Imen mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Mansali, Hatem mailto [IRG, Université Paris-Est (France)]
Jemai, Karima mailto [LIFE, Université de Tunis El Manar (Tunisie)]
The 2018 International Conference of the African Federation of Operational Research Societies (AFROS 2018)
from 02-07-2018 to 04-07-2018
the African Federation of Operational Research Societies (AFROS)
[en] Accounting quality; ; Accruals quality; Cash holdings; Information asymmetry, ; Financial constraints
[en] This paper examines the impact of accruals quality on corporate cash holdings of a large sample of 6,501 observations of French firms listed in Euronext Paris over the period 2000-2015. The results show that cash holdings decrease with accruals quality, suggesting that firms tend to increase their cash reserves in the presence of information asymmetry driven, in particular, by low quality of accounting quality. Results also report that this negative effect is more pronounced in financially constrained firms than in financially unconstrained ones. This indicates that low reporting quality drives higher cash holdings when firms are, in addition, financially constrained, which emphasizes the importance of information asymmetry for corporate cash holdings.
Overall, our conclusion is consistent with the precautionary motive for cash holdings. We also find support for the notion that corporate transparency is a key factor in explaining a firm’s cash management policy, and in general, corporate policies.

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