Document details

Earnings overseas and cash holdings

Author(s): Nascimento, Madalena Correia Martins

Date: 2015

Persistent ID:

Origin: Repositório Institucional da UNL

Subject(s): Cash; Taxation; Liquidity; Risk


I investigate the impact of foreign pre-tax income on the total amount of cash held by companies and on the amount of cash that is held in companies’ foreign subsidiaries. I also investigate the impact of the existence and amount of cash held on companies’ foreign subsidiaries in the composition of cash holdings in terms of risk and liquidity. Using a sample of 100 largest U.S. non-financial and non-utilities companies I find that companies with higher earnings overseas present higher cash reserves and invest a higher fraction of their cash in risky assets. My evidence suggests that companies have a different optimization strategy for cash overseas, in which precautionary motives are not the main driver for holding cash.

Document Type Master thesis
Language English
Advisor(s) Cunha, Igor
Contributor(s) Nascimento, Madalena Correia Martins
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