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Author(s): Hernâni Monteiro, Armando Silva, Sónia Silva
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).