ETF ownership and corporate cash holdings

Tosun, Onur Kemal ORCID: https://orcid.org/0000-0003-2551-1408 and El Kalak, Izidin ORCID: https://orcid.org/0000-0002-2992-4042 2022. ETF ownership and corporate cash holdings. European Financial Management 28 (5) , pp. 1308-1346. 10.1111/eufm.12352

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Abstract

Do exchange traded funds (ETFs) influence corporate cash holding decisions? Consistent with reduced managerial learning from the stock market and increased uncertainty due to higher ETF ownership, we show that firms included in ETF baskets have higher cash holdings as a precautionary response. We address endogeneity concerns through different natural experiments, namely, the reconstitution of the Russell 1000/2000 index and BlackRock’s acquisition of iShares. We identify changes in revenue, external financing, share repurchases, and net working capital as potential channels through which cash holdings increase due to higher ETF ownership, with cash holdings increases having positive impact on firm value.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Wiley
ISSN:	1354-7798
Date of First Compliant Deposit:	23 January 2022
Date of Acceptance:	18 January 2022
Last Modified:	02 May 2023 11:39
URI:	https://orca.cardiff.ac.uk/id/eprint/146846

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