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A penny saved

Johansson Lagerstedt, Andreas LU ; Ljunggren Westlundh, Oscar and Törnqvist, Truls (2016) FEKN90 20161
Department of Business Administration
Abstract
Abstract

Title: A penny saved: Do cash holdings reduce profitability? Seminar date: May 25, 2016

Course: FEKN90, For the degree of: Master of Science in Business and Economics, 30HP

Authors: Andreas Lagerstedt, Oscar Ljunggren Westlundh, Truls Törnqvist

Advisor: Anna Glenngård

Keywords: Cash holdings, profitability, Stockholm stock exchange, overinvestment, Jensen’s free cash flow hypothesis.

Purpose: The overall purpose of this study is to investigate if profitability is negatively affected by cash holdings for firms on the Swedish market. The study will also determine if there are any differences in this aspect before, during and after the financial crisis of 2008-2009.

Methodology: This study uses a quantitative and... (More)
Abstract

Title: A penny saved: Do cash holdings reduce profitability? Seminar date: May 25, 2016

Course: FEKN90, For the degree of: Master of Science in Business and Economics, 30HP

Authors: Andreas Lagerstedt, Oscar Ljunggren Westlundh, Truls Törnqvist

Advisor: Anna Glenngård

Keywords: Cash holdings, profitability, Stockholm stock exchange, overinvestment, Jensen’s free cash flow hypothesis.

Purpose: The overall purpose of this study is to investigate if profitability is negatively affected by cash holdings for firms on the Swedish market. The study will also determine if there are any differences in this aspect before, during and after the financial crisis of 2008-2009.

Methodology: This study uses a quantitative and deductive method using panel data. Data was mainly gathered using Thomson reuters datastream. The regression method is Ordinary Least Squares and is performed using eViews.

Theoretical perspectives: The theoretical perspective is based on costs associated with the principal-agent problem described in Jensen's free cash flow hypothesis (1986).
Empirical foundation: This study is based on 108 firms listed on the Stockholm stock exchange and covers the years 2004-2014. Profitability is the dependent variable and the variable investigated is cash holdings. Additional independent variables included are leverage, size and Tobin’s Q.

Conclusions: The regression showed that no significant relationship between cash holdings and profitability could be found. No significant difference in this relationship could be found between the time periods before, during and after the financial crisis. (Less)
Abstract (Swedish)
Sammanfattning

Titel: A penny saved: Does cash holdings reduce profitability?

Seminariedatum: May 25, 2016

Kurs: FEKN90, For the degree of: Master of Science in Business and Economics, 30HP

Författare: Andreas Lagerstedt, Oscar Ljunggren Westlundh, Truls Törnqvist

Handledare: Anna Glenngård

Nyckelord: Cash holdings, profitability, Stockholm stock exchange, overinvestment, Jensen’s free cash flow hypothesis.

Syfte: Det primära syftet med studien är att undersöka om lönsamhet är negativt relaterat till likvida medel på den svenska marknaden. Studien kommer även undersöka om det föreligger skillnader i denna aspekt mellan perioderna före, under och efter den finansiella krisen 2008- 2009.

Metod: Studien har en... (More)
Sammanfattning

Titel: A penny saved: Does cash holdings reduce profitability?

Seminariedatum: May 25, 2016

Kurs: FEKN90, For the degree of: Master of Science in Business and Economics, 30HP

Författare: Andreas Lagerstedt, Oscar Ljunggren Westlundh, Truls Törnqvist

Handledare: Anna Glenngård

Nyckelord: Cash holdings, profitability, Stockholm stock exchange, overinvestment, Jensen’s free cash flow hypothesis.

Syfte: Det primära syftet med studien är att undersöka om lönsamhet är negativt relaterat till likvida medel på den svenska marknaden. Studien kommer även undersöka om det föreligger skillnader i denna aspekt mellan perioderna före, under och efter den finansiella krisen 2008- 2009.

Metod: Studien har en kvantitativ och deduktiv metod och använder paneldata. Thomson reuters datastream har varit den huvudsakliga datakällan och regressionen har utförts genom metoden minsta kvadrat metoden i programmet eViews.

Teoretiska perspektiv: Teorin som ligger till grund för studien baserar sig på kostnader hänförbara till principal-agent problemet som beskrivs i Jensen’s free cash flow hypothesis (1986)
Empiri: Studien baseras på 108 företag noterade på Stockholmsbörsen och inkluderar åren 2004- 2014. Lönsamhet är den beroende variabeln och den undersökta variabeln är likvida medel. De andra oberoende variablerna är skuldsättning, storlek och Tobin’s Q.

Resultat: Regressionen visade inget signifikant samband mellan likvida medel och lönsamhet. Undersökning mellan perioderna före, under och efter den finansiella krisen kunde inte påvisa någon signifikant skillnad mellan perioderna. (Less)
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author
Johansson Lagerstedt, Andreas LU ; Ljunggren Westlundh, Oscar and Törnqvist, Truls
supervisor
organization
alternative title
Does cash holdings reduce profitability?
course
FEKN90 20161
year
type
H1 - Master's Degree (One Year)
subject
keywords
Cash holdings, profitability, Stockholm stock exchange, overinvestment, Jensen’s free cash flow hypothesis
language
English
id
8880317
date added to LUP
2016-09-13 15:27:42
date last changed
2016-09-13 15:27:42
@misc{8880317,
  abstract     = {Abstract

Title: A penny saved: Do cash holdings reduce profitability? Seminar date: May 25, 2016

Course: FEKN90, For the degree of: Master of Science in Business and Economics, 30HP

Authors: Andreas Lagerstedt, Oscar Ljunggren Westlundh, Truls Törnqvist

Advisor: Anna Glenngård

Keywords: Cash holdings, profitability, Stockholm stock exchange, overinvestment, Jensen’s free cash flow hypothesis.

Purpose: The overall purpose of this study is to investigate if profitability is negatively affected by cash holdings for firms on the Swedish market. The study will also determine if there are any differences in this aspect before, during and after the financial crisis of 2008-2009.

Methodology: This study uses a quantitative and deductive method using panel data. Data was mainly gathered using Thomson reuters datastream. The regression method is Ordinary Least Squares and is performed using eViews.

Theoretical perspectives: The theoretical perspective is based on costs associated with the principal-agent problem described in Jensen's free cash flow hypothesis (1986).
Empirical foundation: This study is based on 108 firms listed on the Stockholm stock exchange and covers the years 2004-2014. Profitability is the dependent variable and the variable investigated is cash holdings. Additional independent variables included are leverage, size and Tobin’s Q.

Conclusions: The regression showed that no significant relationship between cash holdings and profitability could be found. No significant difference in this relationship could be found between the time periods before, during and after the financial crisis.},
  author       = {Johansson Lagerstedt, Andreas and Ljunggren Westlundh, Oscar and Törnqvist, Truls},
  keyword      = {Cash holdings,profitability,Stockholm stock exchange,overinvestment,Jensen’s free cash flow hypothesis},
  language     = {eng},
  note         = {Student Paper},
  title        = {A penny saved},
  year         = {2016},
}