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Annual Conference

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Corporate Finance

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May 2014

Financial Flexibility and Corporate Cash Policy

Tao CHEN, Jarrad HARFOLD, Chen LIN
Using variations in local real estate prices as exogenous shocks to corporate financing capacity, we investigate the causal effects of financial flexibility on cash policies of US firms. Building on this natural experiment, we find strong evidence that increases in real estate values lead to smaller...
Keywords: Financial Flexibility, Real Estate Prices, Cash Policy
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