Cash

Abstract: This paper investigates whether stock prices reflect information about future earnings contained in the accrual and cash flow components of current earnings. The extent to which current earnings performance persists into the future is shown to depend on the relative magnitudes of the cash and accrual components of current earnings. However, stock prices are found to act as if investors "fixate" on earnings, failing to reflect fully information contained in the accrual and cash flow components of current earnings until that information impacts future earnings.

Abstract: Introduction, 545. — I. A simple model, 545. — II. Some consequences of the analysis, 549. — III. The simple model and reality, 552.

Abstract: The Applied Theory of Money: Part I. Monetary Factors and their Fluctuations: 1. The applied theory of money 2. The proportion of savings deposits to cash deposits 3. The velocities of circulation 4. The ratio of bank money to reserve money 5. The activity of business Part II. The Rate of Investment and its Fluctuations: 6. Fluctuations in the rate of investment: i. Fixed capital 7. Fluctuations in the rate of investment: ii. Working capital 8. Fluctuations in the rate of investment: iii. Liquid capital 9. Historical illustrations Part III. The Management of Money: 10. The problem of the management of money 11. Methods of national management: i. The control of the member banks 12. Methods of national management: ii. The regulation of the central reserves 13. Problems of international management: i. The relations of central banks to one another 14. Problems of international management: ii. The gold standard 15. Problems of international management: iii. The problem of national autonomy 16. Methods of national management: iii. The control of the rate of investment 17. Problems of supernational national management.

Abstract: We model a firm’s demand for liquidity to develop a new test of the effect of financial constraints on corporate policies. The effect of financial constraints is captured by the firm’s propensity to save cash out of cash flows (the cash flow sensitivity of cash). We hypothesize that constrained firms should have a positive cash flow sensitivity of cash, while unconstrained firms’ cash savings should not be systematically related to cash flows. We empirically estimate the cash flow sensitivity of cash using a large sample of manufacturing firms over the 1971 to 2000 period and find robust support for our theory. TWO IMPORTANT AREAS OF RESEARCH in corporate finance are the effects of financial constraints on firm behavior and the manner in which firms perform financial management. These two issues, although often studied separately, are fundamentally linked. As originally proposed by Keynes (1936), a major advantage of a liquid balance sheet is that it allows firms to undertake valuable projects when they arise. However, Keynes also argued that the importance of balance sheet liquidity is influenced by the extent to which firms have access to external capital markets (p. 196). If a firm has unrestricted access to external capital— that is, if a firm is financially unconstrained—there is no need to safeguard against future investment needs and corporate liquidity becomes irrelevant. In contrast, when the firm faces financing frictions, liquidity management may become a key issue for corporate policy. Despite the link between financial constraints and corporate liquidity demand, the literature that examines the effects of financial constraints on firm behavior has traditionally focused on corporate investment demand. 1 In an influential paper, Fazzari, Hubbard, and Petersen (1988) propose that when firms face financing constraints, investment spending will vary with the availability of internal funds, rather than just with the availability of positive net present

Abstract: To identify the effect of social capital on financial development, we exploit social capital differences within Italy. In high-social-capital areas, households are more likely to use checks, invest less in cash and more in stock, have higher access to institutional credit, and make less use of informal credit. The effect of social capital is stronger where legal enforcement is weaker and among less educated people. These results are not driven by omitted environmental variables, since we show that the behavior of movers is still affected by the level of social capital of the province where they were born.