Beschreibung:
We find that firms spend more cash on capital expenditures and R&D investment but less cash on acquisitions and payout to shareholders and debtholders when their product market peers increase investment. We also find that peer investment is positively associated with the value of cash to shareholders. The positive effect of peer investment on the value of cash is stronger for firms operating in more concentrated industries and firms with more financial constraints. Overall, our evidence supports the industry dynamic view that firms use cash as precautionary savings to counter increased competitive threats from their product market peers