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Searching for an Optimal Level of Cash Holdings for Korean Chaebols

국내 재벌 계열사들의 최적 현금유동성 수준에 대한 실증적 분석

  • Kim, Hanjoon (Division of Business Administration, Hoseo University)
  • 김한준 (호서대학교 사회과학대학 경영학부)
  • Received : 2015.07.07
  • Accepted : 2015.10.08
  • Published : 2015.10.31

Abstract

This study examined one of the concerned or even imperative issues in the field of contemporary finance related to approaching an optimal level of cash holdings for the firms belonging to the chaebols in the Korean domestic capital markets. However, the subject may not have been drawn much attention so far, even if there are still ongoing and active debates among the interest parties at the macro- or micro-level. Two primary hypotheses were postulated to be empirically tested. On the results of the first hypothesis test for the existence of an optimal cash reserves for the sample firms, two estimation techniques were performed in terms of a quadratic regression equation and a relationship between a firm's value and the residuals derived from the static panel date model. As a primary financial implication of the study which may contribute to the practitioners and the academics in finance, the optimal level of cash holdings can be estimated by controlling for the a priori significant components for the sample firms towards maximizing firm value.

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