Cash holding dynamics and competition intensity: Evidence from UK firms

Gbenga Adamolekun*, Edward Jones, Hao Li

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
44 Downloads (Pure)


Using a quasi-natural experiment and various measures of competition intensity, we examine whether an increase in product market competition is a key driver of firm cash holdings. We find that firms increase cash holdings when competition is intense. The results suggest that the degree of increase in cash holdings is magnified among firms exposed to high predatory threat and financing friction. In addition, we examine if increasing cash holdings offers a competitive advantage in the product market. Our results indicate that firms with large cash reserves make gains in market share at the expense of their rivals. Gains in the product market are more pronounced among firms with low exposure to predatory risk and financing frictions.
Original languageEnglish
Pages (from-to)641-662
Number of pages22
JournalManagerial and Decision Economics
Issue number1
Early online date13 Sept 2022
Publication statusPublished - Jan 2023


Dive into the research topics of 'Cash holding dynamics and competition intensity: Evidence from UK firms'. Together they form a unique fingerprint.

Cite this