Cash Holdings of S & P Firms Over the Past Decade

Abstract

Over the past decade, financial research suggests US firms hold a significant amount of cash. This growing amount of cash has attracted attention from economics, the business press and government. A firm's cash balance could well indicate the firm elects to hold cash rather than invest in suboptimal investments. There are trade-offs between holding too much cash and holding too little. This exploratory study attempts to find financial relationships that explain the cash held by S&P 100 firms over the decade from fiscal year 2002 to 2011.