{"title":"The more, the merrier: Performance effects of cash over the business cycle","authors":"Eirik Sjåholm Knudsen , Fredrik Prøsch Hage , Martha Benan Vethe","doi":"10.1016/j.scaman.2022.101255","DOIUrl":null,"url":null,"abstract":"<div><p>This paper adds to the recent interest in the link between cash and firm performance, by studying how this relationship varies across boom- and bust cycles. We use data of Norwegian firms from a broad range of sectors in the period 2005–2015, and both replicate and extend previous findings on the relationship between cash and performance over the business cycle. We find that i) cash has a positive, but weakly diminishing effect on operational firm performance (ROA) throughout the entire sample period, and ii) that the curvilinear relationship between cash and firm performance is the most pronounced in the pre-recession years, while it is virtually linearly positive in recessions and post-recession periods. We conclude that cash indeed has an impact on firms’ operational performance, and especially so in recessionary times.</p></div>","PeriodicalId":47759,"journal":{"name":"Scandinavian Journal of Management","volume":null,"pages":null},"PeriodicalIF":2.0000,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Scandinavian Journal of Management","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0956522122000628","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"MANAGEMENT","Score":null,"Total":0}
引用次数: 0
Abstract
This paper adds to the recent interest in the link between cash and firm performance, by studying how this relationship varies across boom- and bust cycles. We use data of Norwegian firms from a broad range of sectors in the period 2005–2015, and both replicate and extend previous findings on the relationship between cash and performance over the business cycle. We find that i) cash has a positive, but weakly diminishing effect on operational firm performance (ROA) throughout the entire sample period, and ii) that the curvilinear relationship between cash and firm performance is the most pronounced in the pre-recession years, while it is virtually linearly positive in recessions and post-recession periods. We conclude that cash indeed has an impact on firms’ operational performance, and especially so in recessionary times.
期刊介绍：
The Scandinavian Journal of Management (SJM) provides an international forum for innovative and carefully crafted research on different aspects of management. We promote dialogue and new thinking around theory and practice, based on conceptual creativity, reasoned reflexivity and contextual awareness. We have a passion for empirical inquiry. We promote constructive dialogue among researchers as well as between researchers and practitioners. We encourage new approaches to the study of management and we aim to foster new thinking around management theory and practice. We publish original empirical and theoretical material, which contributes to understanding management in private and public organizations. Full-length articles and book reviews form the core of the journal, but focused discussion-type texts (around 3.000-5.000 words), empirically or theoretically oriented, can also be considered for publication. The Scandinavian Journal of Management is open to different research approaches in terms of methodology and epistemology. We are open to different fields of management application, but narrow technical discussions relevant only to specific sub-fields will not be given priority.
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