203
Views
0
CrossRef citations to date
0
Altmetric
Research Article

Financial distress and value of cash holdings: evidence from the Korean stock market

ORCID Icon &
Pages 1833-1837 | Published online: 07 Jun 2022
 

ABSTRACT

This study examines how investors in capital markets evaluate the levels of cash held by financially distressed companies. Facing financial hardship, managers first lower the bankruptcy risk by reducing internal capital outflows and securing liquidity. This increases the value of the business, as investors place a higher value on financially distressed companies that hold cash than on those that do not. Empirical results using the Korean stock market show that the higher the level of financial risk, the higher the value of cash holdings. The results of this study suggest that when in financial risk, a company must have sufficient cash for a high corporate valuation.

JEL CLASSIFICATION:

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government under Grant [NRF-2020S1A5A8044467].

Log in via your institution

Log in to Taylor & Francis Online

PDF download + Online access

  • 48 hours access to article PDF & online version
  • Article PDF can be downloaded
  • Article PDF can be printed
USD 53.00 Add to cart

Issue Purchase

  • 30 days online access to complete issue
  • Article PDFs can be downloaded
  • Article PDFs can be printed
USD 205.00 Add to cart

* Local tax will be added as applicable

Related Research

People also read lists articles that other readers of this article have read.

Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine.

Cited by lists all citing articles based on Crossref citations.
Articles with the Crossref icon will open in a new tab.