Cash holdings and labor heterogeneity : the role of skilled labor

Ghaly, Mohamed and Anh Dang, Viet and Stathopoulos, Konstantinos (2017) Cash holdings and labor heterogeneity : the role of skilled labor. Review of Financial Studies, 30 (10). 3636–3668. ISSN 0893-9454

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Firms differ in their dependence on skilled labor, and face labor adjustment costs that increase with their workers’ skill level. We show that firms with a higher share of skilled workers, and thus less flexibility to adjust their labor demand in response to cash flow shocks, hold more precautionary cash. The effect of labor skills on cash holdings is more pronounced for financially constrained firms and varies with exogenous differences in firing and hiring costs. We address endogeneity concerns by using subsamples of firms with reasonably similar characteristics, propensity score matching, and a quasi-experimental shock to labor markets.

Item Type:
Journal Article
Journal or Publication Title:
Review of Financial Studies
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This is a pre-copy-editing, author-produced PDF of an article accepted for publication in The Review of Financial Studies following peer review. The definitive publisher-authenticated version Mohamed Ghaly, Viet Anh Dang, Konstantinos Stathopoulos; Cash Holdings and Labor Heterogeneity: The Role of Skilled Labor, The Review of Financial Studies, Volume 30, Issue 10, 1 October 2017, Pages 3636–3668, is available online at:
Uncontrolled Keywords:
?? cash holdingsskilled laborlabor adjustment costshiring costsfiring costs labor heterogeneityfinanceeconomics and econometricsaccounting ??
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02 Mar 2017 11:24
Last Modified:
18 Dec 2023 01:45