Cash‐holding Benefits and Their Influence on Seasoned Equity Offering Decisions
研究了现金充裕的公司为何通过增发股票而非使用现有现金来积累更多现金，发现预防性动机是最主要的原因。
This study investigates the cash‐holding motivations of issuers with excess cash. It aims to explain why these issuers choose to accumulate even more cash through stock issuances rather than utilize their existing surplus. I assess three competing cash‐holding motivation hypotheses: whether issuers raise cash: (i) to fund the needs of future growth opportunities; (ii) for precautionary reasons; or (iii) to misuse it to maximize managerial benefits. I identify 480 issuers with pro‐forma excess cash surpassing the seasoned equity offering size by considering a dataset of 3,438 issuers from 1996 to 2018. Results reveal that these issuers have stronger funding needs, and precautionary and agency‐driven spending motivations, with precautionary reasons being the most dominant motivation. The results suggest that the benefits of cash‐holding could motivate stock issuances.