Employment stability and corporate cash holdings

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

Research output: Contribution to journalJournal


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 languageEnglish
JournalApplied Economics Letters
Issue numberEarly Access
Publication statusPublished - 2021

Corresponding author email



  • Cash holdings
  • employment stability
  • implicit contract
  • job security

Indexed by

  • ABDC-B
  • SSCI


Dive into the research topics of 'Employment stability and corporate cash holdings'. Together they form a unique fingerprint.

Cite this