Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 25, 2020 erstellt
Description:
This paper provides new evidence on how the largest nonfinancial firms actively manage the composition of their financial assets. We construct a novel hand-collected panel dataset to document their financial portfolio dynamics. Over the past decade, bond portfolios have grown to be at least as large as cash-like instruments. In particular, we show a meteoric rise of corporate bond holdings, which have outgrown sovereign bond holdings to reach 25% of total corporate financial assets by 2017. Moreover, we conduct two event studies to shed light on the drivers of this growth. We first observe a drastic reversal after the 2017 tax reform, when firms liquidated bond portfolios to fund large share repurchases, whereas cash-like instruments remained stable. Second, the liquidity crisis of early 2020 triggered a spike in cash-like instruments, but not in riskier assets such as corporate bonds. Our evidence suggests large firms often actively manage their financial portfolios in a way that reflects tax incentives and reach for yield as opposed to financial constraints