The Influence of Idle Cash on Corporate Performance: Evidence from S&P500 companies

• Main Authors: Chan, Chial-Wei, 詹僑緯
• Other Authors: Wang, Sue-Fung
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/ex9xan

碩士 === 國立交通大學 === 財務金融研究所 === 104 === After dividing cash into idle cash and working cash, this paper focus on whether idle cash will have an impact on corporate performance. Besides, we will have a further discussion that according to three aspects: different industries, the asset size and growth of corporation, the idle cash also makes different impacts on corporate performance. This paper shows that in the recession, if the corporation has much idle cash, it can be much easier to grasp investment opportunities in the future, so it also has better performance in all industries. First, manufacturing has more investment opportunities because of the trait of the industry, so it has positive relation between idle cash and corporate performance. On the other side, due to low relation between this industry and economy circumstances, public utilities have idle cash that only can earn less interest revenue and lead to poor corporate performance. In the recession, mining has poor capital efficiency, it can’t have profit with holding idle cash. Second, the large corporation tend towards the invest project which has nothing to do with its main operating activities, so there is a non-significant relation between idle cash and corporate performance. The small corporation tend to find investment opportunities actively, so it has much idle cash that causes better performance. Final, the low-growth corporation lacks for investment opportunities, so it has a non-significant relation between idle cash and corporate performance. But the high-growth corporation has enough investment opportunities, and so it has a significant relation between idle cash and corporate performance.