Abstract
We use a sample of 8,869 firm-years from the highly regulated Main Market (MAIN) and relatively unregulated Alternative Investment Market (AIM) in the United Kingdom to analyse the impact of financial restrictions on optimal cash holdings in the context of financial crises. Employing system generalised methods of moments, we find that AIM firms have a faster adjustment speed of cash as confirmed by precautionary and transaction motives over 2001-2017. However, AIM firms decrease (increase) their adjustment speed of cash more than MAIN firms during (after) the financial crises.
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