Cash Holdings, Diversification, and The Product Market

Abstract

The amount of cash holdings and number of multi-segment firms has increased steadily over the last 30 years. Both can mitigate firm risk and help firms expand their investment opportunity. In this study, I test the joint impact of cash holdings and diversification in the product market. I find that cash holdings act as complements in the product market, but diversification adds additional protection against predatory risk from its competitors.

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Sean Brunson
PhD Candidate Finance

My research interests include real estate, home prices, and mortgages.