Employment stability and corporate cash holdings

Syungjin Han; Chang Hyun Kim

doi:10.1080/13504851.2021.1967274

Employment stability and corporate cash holdings

Syungjin Han (First Author), Chang Hyun Kim (Participant Author)

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Hongik Univ

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Abstract

This paper investigates how a firm's employment stability affects the level of its cash holdings. We find that firms with high employment stability (as measured by one minus a firm's employment elasticity with respect to its sales) maintain large cash holdings. The positive effect of employment stability on cash holdings is stronger for R&D intensive firms and firms with high firm-specific human capital. These results are consistent with theories predicting that firms hold cash to signal the credibility of their employment policies regarding job security.

Original language	English
Journal	Applied Economics Letters
Issue number	Early Access
DOIs	https://doi.org/10.1080/13504851.2021.1967274
Publication status	Published - 2021

Corresponding author email

sjhan7@hongik.ac.kr

Keywords

Cash holdings
employment stability
implicit contract
job security

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ABDC-B
SSCI

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10.1080/13504851.2021.1967274Licence: CC BY-NC-ND

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Employment stability and corporate cash holdings

Abstract

Corresponding author email

Keywords

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