Corporate Liquidity in Games of Monopoly Power

Jonathan Barron Baskin

147 citations0/0 files storedThe Review of Economics and Statistics

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Corporate Finance and Governance Merger and Competition Analysis Working Capital and Financial Performance

Abstract

Cr oss-sectional variation in corporate liquidity within a sample of large U.S. corporations suggests that there are material effects from product market competiti on. The empirical evidence is consistent with an oligopolistic model wherein liquid assets are employed both to signal commitment to retaliate against market en croachment and to enable firms to rapidly preempt new opportunities. As predicted, firms with high valuation and spending on intangibles, in certain strategic positions, hold large stocks of liquid assets. Copyright 1987 by MIT Press.

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References

1984Corporate financing and investment decisions when firms have information that investors do not have 1958The Cost of Capital, Corporation Finance and the Theory of Investment 1960The Strategy of Conflict 1952The Transactions Demand for Cash: An Inventory Theoretic Approach 1977From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition*1985Patent Races and the Persistence of Monopoly

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