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Full-Text Articles in Business
Understanding Precautionary Cash At Home And Abroad, Michael W. Faulkender, Kristine W. Hankins, Mitchell A. Petersen
Understanding Precautionary Cash At Home And Abroad, Michael W. Faulkender, Kristine W. Hankins, Mitchell A. Petersen
Institute for the Study of Free Enterprise Working Papers
In the presence of market frictions, it is optimal for firms to stockpile cash to fund investment projects which may arise in the future. Prior work has documented that firms’ precautionary savings motives predict variation in the size of firms’ cash stockpiles. The dramatic run-up in cash stockpiles raises the question of why these precautionary motives have increased. In the presence of repatriation taxes, foreign and domestic cash are imperfect substitutes. We show that although precautionary motives explain variation in the level of cash held domestically, they provide little explanatory power for the level of foreign cash. Multinational firms’ foreign …
Hedge Fund Boards And The Market For Independent Directors, Christopher P. Clifford, Jesse A. Ellis, William C. Gerken
Hedge Fund Boards And The Market For Independent Directors, Christopher P. Clifford, Jesse A. Ellis, William C. Gerken
Institute for the Study of Free Enterprise Working Papers
We provide the first examination of hedge fund boards and their directors. The majority of directorships are held by extremely busy independent directors. These directors are sought after by funds because they have more reputational capital at stake, making them independent and credible monitors whose presence can certify fund quality to investors. Busy independent directors are more likely to be hired by high quality funds, and their departure from the board is associated with investor withdrawals. Moreover, funds with busy independent directors are less likely to commit fraud, abuse discretionary liquidity restrictions, or engage in performance-based risk shifting.