Corporate Cash Holdings：rical Investigation of Korea Companies

>This study is to investigate the empirical determinants of Korea manufacturing corporate cash holdings during the period 1991－2003. Our results suggest that there is a significant regime shift in the behavior of corporate cash holdings after the foreign currency crisis. Before the crisis, the determinants of cash holdings include target cash adjustment, liquidity constraints, leverage, market to book ratio, dividend policy, and size. On the other hand, those after the crisis include only two variables such as growth opportunity (market to book ratio) and foreigners' shares. Our results also reveals that there are differences in the determinants of cash holdings between firms in business group and independent firms. For business group, the significant determinants are target cash level adjustment, liquidity constraints, leverage, growth opportunity, and dividend amount. On the other hand, for independent firms they include target cash level adjustment, liquidity constraints, leverage, dividend amount, and foreigners' share ownership. Another results show that corporate governance is also important determinant of Korea corporate cash holdings recently. Our findings also report that firms dynamically respond to the change in target ratio. But this dynamic nature reduces gradually after the crisis.