Abstract
This study investigates the impact of a firm's asset tangibility on the speed of adjusting cash holdings. The Results show that the speed of adjusting cash holdings is 0.46, indicating that on average firms close around half of the deviation from target in one year. This value of CH-SOA provides evidence that US firms have a target (optimal) level of cash towards which they try to adjust their actual cash level. Moreover, such a result supports the dynamic version of the trade-off theory rather than the static version since the value of CH-SOA is less than one. Furthermore, the main result of this research shows that firms with lower asset tangibility adjust faster to the target level of cash.
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