Cash Spending Research Articles

Managing liquidity along the supply chain: Supplier‐base concentration and corporate cash policy

AbstractWe find that customer firms with more concentrated supplier bases tend to hold higher levels of cash reserves. The positive relation between supplier‐base concentration and cash holdings is more pronounced for firms with nonstate ownership, higher market competition, worse inventory efficiency, more relationship‐specific investment, central positions in the production networks, and headquarters located in regions with lower levels of financial development. Furthermore, we show that debt issuance enhances firms' cash holdings when they have concentrated suppliers, and supplier‐base concentration increases firms' cash spending on R&D investment. Our study highlights the importance of supplier structure in shaping corporate cash policy.

FEATURES OF FINANCIAL BEHAVIOR IN CASH, CARDS AND APPLICATIONS

Nowadays market develops new means of payment to force consumers increase their spending readiness. New means of paying (different applications and cards) decrease ‘‘pain of paying’’ and increase readiness of spending. But different means of paying are differently perceived and accepted by the consumers. This research is aimed to reveal some features of spending and financial behavior of consumers depending their preference of cash, cards and applications. Our earlier research proves that using of cash depends on the age. The older persons prefer cash. In certain payments the youngest group prefers doing payments by applications. Unemployed people are more tended to choose cash spending. Those, who generally preferred paying in cash or card, noted that utility bills are paid by app. So, if well-working and trusted system exists people choose application. Reason can be either consumers tend to focus less on the negative feeling associated with the amount paid or with absence of queues and general easiness. Now we tried to discover online consuming features and some psychological characteristics depending of preferences of different means of payment.

Evaluation Internal Control System of Cash Spending Based on the Framework COSO

Evaluation Internal Control System of Cash Spending Based on the Framework COSO

Cannabis legalization: do banking transactions reflect a shift away from the illegal market?

ABSTRACT Using data on banking transactions, we analyse how people changed their spending behaviour when recreational cannabis became legal in Canada. In the data set, we identify people with purchases in a cannabis store after legalization. We apply a difference-in-difference approach to compare their spending before and after legalization. People with cannabis purchases after legalization reduced significantly and persistently their cash spending and electronic transfers, indicating a shift from the black to the legal cannabis market.

Neural Network Algorithm for Budget Expenditure Prediction in LPP RRI Gorontalo

In this Data Mining research, the researcher uses the Neural Network Algorithm to predict budget expenditures at LPP RRI Gorontalo, the goal is to find out how much cash spending at LPP RRI Gorontalo is on average in each month, so it will make it easier for the Treasurer to control cash disbursements in each month. month. Using 412 Expenditure Records Data from 2013 to 2021, the lowest RMSE value is at Hiden Layer 11, Training Cyle 400, Learning Rate 0.1 and Momentum 0.1 with RMSE 0.142. Prediction results look better because they are closer to Real Data, so Neural Networks can be used to predicting spending at LPP RRI Gorontalo.

Why are distressed firms acquisitive?

Acquisitions made by distressed firms are economically important. This paper explores the rationale behind such acquisitions in a quasi-natural experiment and identifies the causal link between bankruptcy risk and acquisitions. Upon an exogenous reduction in bankruptcy risk, distressed firms react by cutting 46% of cash spending on acquisitions, announcing fewer deals, and borrowing less for acquisition-related activities. The evidence suggests that distressed firms make acquisitions to diversify bankruptcy risk. These findings demonstrate a new effect of financial distress on firm investment—the pressure to meet debt obligations creates an incentive for firms to diversify through acquisitions.

Decomposing the Decline of Cash Assistance in the United States, 1993 to 2016.

Cash assistance allocations from Temporary Assistance for Needy Families (TANF) and its predecessor program fell from $34.3 billion to $7.4 billion in real value from 1993 to 2016, a 78% decrease. Some investigations of TANF point to favorable labor market changes as the source of the decline, whereas others point to declining benefit levels and barriers to benefit receipt. This study introduces a framework to decompose the decline of TANF cash assistance into changes in need for cash assistance, the participation rate among those meeting income-based eligibility standards, and benefit levels among those receiving cash support. Using the U.S. Current Population Survey, I find that declining participation explains 52% of the decline in TANF cash assistance from 1993 onward, whereas declining need explains 21%, and declining benefit levels explain 27%. The study then applies reweighting techniques to measure the extent to which compositional changes in the population, such as rising employment rates among single mothers, can explain changes in need, participation, and benefit levels. The results suggest that compositional changes explain only 22% of the decline of TANF cash assistance, confirming that the majority of the decline is due to reduced participation and benefit levels rather than reduced demand for cash support. Adding the noncompositional share of the decline in TANF back to observed levels of cash spending in 2016 would result in nearly $20 billion in additional transfers, more than the minimum amount necessary to lift all single-mother households out of poverty.

The Success of Cannabis Legalization: Evidence from Banking Transactions

Using data on banking transactions, we analyze how people changed their spending behaviour when recreational cannabis became legal in Canada. In the data set, we identify people with purchases in a cannabis store after the legalization. We apply a difference-in-difference approach to compare their spending before and after legalization. People with cannabis purchases after legalization reduced significantly and persistently their cash spending and electronic transfers, indicating a shift from the black to the legal cannabis market. We also find that, across all age and gender groups, cannabis consumers spend significantly more than other people on fast food and alcohol.

Corporate governance and cash holdings: Evidence from worldwide board reforms

Using staggered board reforms as a quasi-natural experiment and a difference-in-differences approach, this study examines the impact of corporate governance on cash holdings in 41 countries. We find that board reforms are followed by significant reductions in cash holdings. This effect is more pronounced for firms with weaker pre-reform corporate governance and for firms from countries with weaker institutional environments. Analysis of cash spending suggests that, following board reforms, firms are more likely to use cash to increase R&D expenditures, dividend payouts, and share repurchases, but not to increase capital or acquisition expenditures. Finally, the results indicate that enhanced corporate governance following board reforms leads to higher (lower) cash (dividend payouts) values, consistent with the view that board reforms strengthen corporate governance.

Financial Innovation, Payment Choice and Cash Demand - Causal Evidence from the Staggered Introduction of Contactless Debit Cards

We provide causal evidence on how the improved convenience of electronic payments affects consumer payment choice and cash demand. We study the staggered introduction of contactless debit cards by a retail bank between 2016-2018. Our analysis is based on account-level data for a random sample of 30’000 bank clients and follows a pre-analysis plan. The timing of access to the contactless payment technology is quasi-random across clients, depending only on the expiry date of the pre-existing debit card. We isolate a “convenience effect” of electronic payments by comparing small-value transactions which are eligible for contactless authentication to large value transactions which are not. On average, consumers increase their use of debit cards for small-value payments in response to receiving a contactless card. Contactless cards increase the frequency of transactions among existing card users but do not cause more consumers to use debit cards. Relative to average consumer cash spending on small-value items, the average increase in debit card use is limited. The impact of contactless cards on cash demand is thus economically small and statistically insignificant.

Geographical proximity and value of corporate cash holdings

PurposeIn this paper, the authors examine the association between a firm's geographical location and the value of its cash holdings.Design/methodology/approachFollowing Loughran and Schultz (2005) and Nielsson and Wójcik (2016), the authors define firms as either geographically remote or geographically proximate based on their distance to areas that are either largely populated or concentrated in financial expertise. We also estimate the marginal value of cash using the model developed by Faulkender and Wang (2006).FindingsThe authors find that the marginal value of cash is $0.10–$0.16 lower in remotely located firms than in geographically proximate firms. The lower marginal value of cash is prominent among remotely located firms with greater severity of information asymmetry. Our findings support the view that the inability of shareholders to closely monitor how managers use of firm cash may increase the perceived conflicts of interest associated with managers' cash spending and decrease the value of cash.Originality/valuePrevious studies try to explain the cash holdings puzzle by attributing it to CEO overconfidence, external funding constraints, poor corporate governance, difference in corporate financial policy, poor investor protection, lack of firm diversification and large operating losses. This study contributes to the extant literature by offering new evidence of the role of geographic location on the value of cash holdings.

Corporate Governance and Cash Holdings: Evidence from Worldwide Board Reforms

Using staggered board reforms as a quasi-natural experiment and a difference-in-differences approach, this study examines the impact of corporate governance on cash holdings in 41 countries. We find that board reforms are followed by significant reductions in cash holdings. This effect is more pronounced for firms with weaker pre-reform corporate governance and for firms from countries with weaker institutional environments. Analysis of cash spending suggests that, following board reforms, firms are more likely to use cash to increase R&D expenditures, dividend payouts, and share repurchases, but not to increase capital or acquisition expenditures. Finally, the results indicate that enhanced corporate governance following board reforms leads to higher cash values.

Decision-making and cash spending patterns of adolescent girls and young women participating in a cash-transfer intervention in Tanzania: Implications for sexual health

Decision-making and cash spending patterns of adolescent girls and young women participating in a cash-transfer intervention in Tanzania: Implications for sexual health

Decision-making and cash spending patterns of adolescent girls and young women participating in a cash-transfer intervention in Tanzania: Implications for sexual health

ABSTRACTAlthough cash transfers (CT) have been recommended as a strategy to address structural drivers of HIV, the evidence of the effects of CT on sexual risk and HIV outcomes is mixed. This could partly be due to CT implementation dynamics and beneficiary interpersonal factors. We conducted an assessment of CT component of the DREAMS programme in Tanzania. We explored how AGYW spent their CT over time, to whom they disclosed cash receipt, and where they sought advice on CT use. The study employed qualitative research methods including: 20 longitudinal in-depth interviews (IDIs) and 60 cross-sectional IDIs with AGYW in the CT programme. Data were analysed thematically. AGYW use of CT fell into five categories: business development, survival, self-care, helping family, and savings. The primary uses of CT funds were investment in businesses and livestock for savings. AGYW use of cash changed over instalments. AGYW consulted a variety of sources when deciding on how to use the cash, primarily mothers, programme personnel, and long-term partners/husbands. CT programmes that give cash directly to AGYW and have a strong entrepreneurial mentorship component could have implications for HIV prevention, SRH, and overall social and economic development.

Creating Intangible Capital

We propose a new framework modelling intangible capital creation as the joint investment of firm resources and skilled human capital. High-intangible firms require less ex-ante cash spending yet must offer more deferred compensation to retain employees, creating unhedgeable risk. A human capital retention motive for financial prudence thus arises, even absent traditional precautionary needs. Insuring unvested claims requires more net cash in good states and equity rather than debt financing. Because intangibles can be easily diverted, firms need more inside equity and unvested employee claims can exacerbate turnover. The model offers an explanation for recent puzzling trends in corporate financing.

Earnings Management in Firms with Data Security Breaches

ABSTRACT Anecdotal research suggests that management is concerned about how Data Security Breaches (DSBs) impact a firm's financial performance. We investigate: whether managers in DSB firms manipulate earnings through real earnings management (REM) and/or accrual-based earnings management (AEM); how breach type, disclosure delay, and external monitoring impact earnings management activities; and how earnings management activities influence a DSB firm's performance. Using a propensity score matched sample, results suggest that DSB firms are more likely to manipulate earnings via REM, but not AEM. Additionally, we find that DSB firms engage in REM through cutting discretionary expenses, decreasing discretionary cash spending, and reducing the cost of goods sold through overproduction. We find some evidence that firms are more likely to increase REM when DSBs involve financial information or when firms delay the DSB disclosure or have low analyst coverage. We provide evidence that REM activities lead to lower subsequent performance in DSB firms. Data Availability: The data used are publicly available from the sources cited in the text.

Commitment to build trust by socially responsible firms: Evidence from cash holdings

We show that socially responsible firms use cash as a commitment device to honor implicit commitments to stakeholders. Firms with better social performance hold higher cash balances, especially for firms with social performance related to stakeholders or requiring cash spending. This relation is also stronger for firms that benefit more from social performance, e.g., firms that face more competition in product and labor markets. Social performance related to stakeholders or requiring cash spending increases the marginal value of cash.

Cash or accruals for budgeting? Why some governments in Europe changed their budgeting mode and others not

This paper investigates why central governments in some countries (especially the UK and Austria) have moved from a cash budgeting system to accrual budgeting, while others (particularly Belgium and Portugal) continue to use cash budgeting, given that both groups of countries share that their financial reporting system have become accruals-based. Our research shows that the two countries opting for a complete change to accruals emphasise the importance of consistency of the entire accounting system and the imperative to inform also about resource consumption in the budget. In sharp contrast, the two countries deciding for a partial change and for staying with cash budgeting argue that a clear and unambiguous view at cash spending is authoritative for their budgeting concept and that political decision makers would not accept an accrualbased budget. The change process in all four countries was influenced by several contextual factors, such as cash-accounting legacies and previous NPM-reforms. We conclude that stakeholders in government show more reluctance when deciding on a budgeting concept than about a financial reporting change which is perceived as less essential. We also conclude that the less ambitious reform mode (cash-based budgeting with accrual financial reporting) takes more implementation time than the more ambitious reform mode (accruals for budgeting and reporting). JEL codes: H61, H83, M41 Keywords: cash budgeting, accrual budgeting, international comparison

Why Do Distressed Firms Acquire?

textabstractAcquisitions made by distressed firms in recent years are economically important. This paper explores the rationale behind such acquisitions using a natural experiment. Exploiting a recent tax change which reduces debt restructuring costs for certain creditors and decreases bankruptcy risk, I identify the causal link between financial distress and acquisitions. Upon an exogenous reduction in the probability of bankruptcy, distressed firms react by cutting 34% of cash spending on acquisitions. Moreover, distressed firms refocus by decreasing 75% of the transaction value of diversifying acquisitions and doubling divestitures. The evidence supports the financial synergy hypothesis that distressed firms acquire to diversify cash flow risk, rather than the growth opportunity hypothesis that distressed firms acquire to capture external growth opportunities and revive growth. These findings indicate a new effect of financial distress on investment decisions. When firms are under pressure to meet debt obligations, it creates an incentive for firms to diversify via acquisitions.

An investigation into the impact of ownership structure on the level of cash holdings in the companies accepted in Tehran Stock Exchange Market

Liquidity of a company is the ability to meet cash commitments before the deadline. Selecting from cash spending or cash holdings by the managers is of great importance for the owners of the company. Various factors can be effective in determining the level of company’s liquidity. Ownership structure of companies is one of these factors which may lead to companies’ behavioral change. This change is derived from monitoring activities by different investors in this structure. This study was an attempt to assess the impact of ownership structure on the level of companies’ cash holdings in creating appropriate ownership in connection with creating the level of cash holdings. In this study, ownership structure has been categorized into four types of institutional ownership, managerial ownership, corporate ownership, and foreign ownership. In this regard, the impact of institutional, managerial, corporate, and foreign variables on the level of cash holdings has been investigated. For every category of ownership, a hypothesis was proposed and its impact on the level of cash holdings was tested. The statistical sample of the research included 96 companies from 2004 to 2013. The statistical method of testing the hypotheses in this study was multiple regressions through panel data. The findings revealed a significant relationship between institutional, managerial, and foreign ownership and the level of cash holdings; however, there was no significant relationship between corporate ownership of the company and the level of cash holdings.