Cash holdings of listed and unlisted firms: New evidence from the euro area

Panagiotis Asimakopoulos, Stylianos Asimakopoulos, Filipa Fernandes

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This paper examines the cash holdings behavior of listed and unlisted firms. We argue that unlisted firms, which are smaller, face a greater wedge between the cost of external and internal finance and as a result they need to rely more on the later. Relying on internal funds means that firms have a precautionary motive to hold cash. We test our theory using an unbalanced panel of mainly small medium enterprises within the euro area over the period 2003–2017 paying special attention to the role of financial pressure, financial constraints and the recent financial crisis. Our findings reveal that unlisted firms hold more cash than their listed counterparts due to precautionary motives. In addition, when considering the effect of financial pressure, the results show that the difference in cash holdings between listed and unlisted firms exhibit a ‘U-shaped’ relationship. Finally, unlisted firms have a higher sensitivity to save cash out of cash flow than listed firms. Our results are robust to using different specifications and different financial pressure measures.
Original languageEnglish
Pages (from-to)1708-1729
Number of pages23
JournalThe European Journal of Finance
Issue number17
Early online date12 Aug 2019
Publication statusPublished - 2019


  • Cash holdings
  • financial pressure
  • listed and unlisted firms
  • precautionary motives

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)


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