Reference : Accruals Quality, Financial Constraints And Corporate Cash Holdings
Scientific journals : Article
Business & economic sciences : Accounting & auditing
Accruals Quality, Financial Constraints And Corporate Cash Holdings
Mansali, Hatem mailto [IRG, Université Paris-Est, France]
Derouiche, Imen mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Jemai, Karima mailto [IFGT, Université de Tunis El Manar, Tunisia]
Managerial Finance
Emerald Group Publishing
United Kingdom
[en] Accruals quality ; Cash holdings ; Financial constraint
[en] This paper examines the impact of accruals quality on the 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 accounting quality. The results also show 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, the conclusion is consistent with the precautionary motive for cash holdings. Support is also found for the notion that corporate transparency is a key factor in explaining a firm’s cash management policy and, in general, corporate policies.

File(s) associated to this reference

Fulltext file(s):

Limited access
Accruals quality FC and cash holdings.pdfPublisher postprint290.13 kBRequest a copy

Bookmark and Share SFX Query

All documents in ORBilu are protected by a user license.