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台灣上市公司的現金持有、現金持有價值與公司生命週期：預防性動機假說之驗證
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where
V
i,y
is firm
i
’s firm value in year
y
;
is firm
i
’s cash ratio (measured as the ratio
of cash to book value of net assets (total assets minus cash) in year
y
);
L
Young
,
L
Q
2
,
L
Q
3
,
L
Q
4
, and
L
Old
are firm age quintile dummy variables;
θ
i
is firm-fixed effect; and
π
y
is time-fixed effect.
If young (mature) TWSE-listed firms tend to have greater (smaller) cash value, we should
see that the coefficient on
is significantly greater than the coefficient on
.
3. Findings and Implications
Using firm age as a proxy for corporate life cycle, this paper reveals three main results.
First of all, TWSE-listed firms’ cash holdings decrease monotonically with firm age. In other
words, young TWSE-listed firms tend to hold more cash than mature firms. Secondly,
relative to mature firms, young TWSE-listed firms tend to hold more precautionary-based
cash because they exhibit greater industry-level volatility in cash flow, higher market-to-
book ratio, greater density of capital expenditures, greater R&D intensity, higher financing
deficit, and smaller size, in which case adverse shocks and financial distress are more costly
for them. Third, young (mature) TWSE-listed firms experience larger (smaller) cash value,
given the fact that they are more (less) financially constrained. Overall, the empirical
implication of our findings is that TWSE-listed firms’ cash holding and cash value correlate
with firm age used as a proxy for corporate life cycle, thereby providing additional support
for the precautionary saving channel in explaining corporate liquidity.
4. Contributions
This paper contributes to the literature in two ways. First, to the best of our knowledge,
this is the first work that provides direct evidence associating cash holding and the value of
cash holding to corporate life cycle for TWSE-listed firms based on the precautionary motive
hypothesis. The paper closest to ours is Dittmar and Duchin (2011), who document the
dynamics of U.S. firms’ cash holdings over the corporate life cycle. However, they ignore
the relationship between cash value and the corporate life cycle. This study fills this gap.
Second of all, most recent literature has been devoted to the increase in cash holdings of
TWSE-listed firms (Song and Lee, 2012), suggesting that it is becoming more important
over time to manage corporate liquidity for TWSE-listed firms. Our paper relates to the
literature examining the dynamics in cash holdings and cash value over the corporate life
cycle for Taiwan’s firms, thereby highlighting the importance of the precautionary motive for
corporate liquidity management.