JOURNAL ARTICLE

Debt capacity, cash holdings and financial constraints.

  • Published In: Journal of Business Finance & Accounting, 2024, v. 51, n. 7/8. P. 2020 1 of 3

  • Database: Business Source Ultimate 2 of 3

  • Authored By: Lu, Chien‐Lin; Chen, Hsuan‐Chi; Chou, Robin K.; Lin, Chih‐Yung 3 of 3

Abstract

In this study, we explore the relationship among debt capacity, cash holdings and financial constraints by using the deviation in leverage as a proxy for debt capacity. Our findings show a positive relationship between cash holdings and debt capacity. Furthermore, financially constrained firms benefit more from holding cash that leads to larger increases in debt capacity and easier access to bank loans and credit lines by reducing the heterogeneous beliefs of creditors. Our results indicate that cash holdings complement debt capacity for financially constrained firms. [ABSTRACT FROM AUTHOR]

Additional Information

  • Source:Journal of Business Finance & Accounting. 2024/07, Vol. 51, Issue 7/8, p2020
  • Document Type:Article
  • Subject Area:Business and Management
  • Publication Date:2024
  • ISSN:0306-686X
  • DOI:10.1111/jbfa.12771
  • Accession Number:178834821
  • Copyright Statement:Copyright of Journal of Business Finance & Accounting is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Looking to go deeper into this topic? Look for more articles on EBSCOhost.