Abstract:

The purpose of this study is to investigate whether the cash holdings of Eurozone public companies increase after the most recent financial crisis beginning in 2008, compared to the pre-crisis period. Different hypotheses are formulated involving cash holdings and their determinants using a sample of listed companies from 11 Euro-adhering countries by 2001. To test those hypotheses, we apply different panel and cross-section data methodologies. Contrary to the evidence provided by previous studies, our results show that, on average, firms do not significantly increase their cash holdings in the post-crisis period compared to the pre-crisis period. However, we provide evidence that the sensitivity of cash to cash flows increase in the post-crisis period for companies from the most affected countries (Spain, Ireland, and Portugal).