The Department of Finance and FRIC, Center for Financial Frictions, are proud to announce the upcoming seminar with Sven Klingler, Norwegian Business School.
Sven Klingler will present:
Cash is not King, Evidence from the Commercial Paper Market
Using new transaction-level data for non-financial commercial paper (CP) in the U.S., we show that companies systematically reduce their outstanding short-term debt on quarterly and annual disclosure dates. Constraints on CP lending supply cannot explain this pattern. Instead, cash-rich firms prefer repaying short-term debt over disclosing higher cash holdings, which are often valued below face value. Firms with riskier cash ows use more CP debt within their reporting periods, highlighting the role of CP debt as precautionary buffer. Moreover, firms facing tighter scrutiny from their investors repay their CP debt more aggressively to mitigate free cash flow concerns.
Solbjerg Plads 3