Excess corporate cash: Follow the money

American corporations reportedly hold in excess of $1.7 trillion in cash as of July 2012. Can the broader concept of liquidity help us understand the current situation better? Since no benchmarks exist to de‐termine excess liquidity on a corporate balance sheet, why do balance sheets still make most...

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Bibliographic Details
Published in:The Journal of Corporate Accounting & Finance 2012-11, Vol.24 (1), p.29-34
Main Author: Le Guyader, Louis P.
Format: Article
Language:English
Subjects:
Cash management
Liquidity
Manycompanies
Money markets
Multinational corporations
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Summary:American corporations reportedly hold in excess of $1.7 trillion in cash as of July 2012. Can the broader concept of liquidity help us understand the current situation better? Since no benchmarks exist to de‐termine excess liquidity on a corporate balance sheet, why do balance sheets still make most investors and analysts believe that corporations are holding too much cash? And the author makes a surprising revelation: Much of the cash buildup is concentrated in only 10 companies. © 2012 Wiley Periodicals, Inc.
ISSN:1044-8136
1097-0053
DOI:10.1002/jcaf.21810