Financial Flexibility and Short-Term Financing Needs: Evidence from Seasonal Firms

Persistent Link:
http://hdl.handle.net/10150/316777
Title:
Financial Flexibility and Short-Term Financing Needs: Evidence from Seasonal Firms
Author:
Fairhurst, Douglas J.
Issue Date:
2014
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
Firms that face seasonal demand account for an important fraction of the U.S. economy. However, there is surprisingly little evidence on these firms' financing decisions. Yet, studying these decisions provides a natural setting to shed light on the types of capital (i.e. cash or debt) that firms use to manage short-term financing needs. Using seasonal firms as a setting to examine this issue, I show that seasonal financing needs are met with debt with low exposure to information asymmetry, such as short-term debt and trade credit. I further show that cash reserves, which have high carrying costs and can at time lead to agency problems, are not used for seasonal financing needs. Further, as financial flexibility theory would predict, I document that seasonal firms maintain more conservative financial policies to increase the ability to use debt for short-term financing needs. Specifically, seasonal firms are less levered and have long-term debt with a longer average maturity. Further, seasonal firms adjust toward leverage targets slower during fiscal quarters when debt is used for short-term financing. Overall, my findings indicate that firms minimize costs associated with short-term financing needs by using debt with low issuance costs and the use of this debt impacts the overall capital structure of the firm.
Type:
text; Electronic Dissertation
Keywords:
Cash holdings; Seasonal; Working capital management; Management; Capital stucture
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Graduate College; Management
Degree Grantor:
University of Arizona
Advisor:
Klasa, Sandy
Committee Chair:
Klasa, Sandy

Full metadata record

DC FieldValue Language
dc.language.isoen_USen
dc.titleFinancial Flexibility and Short-Term Financing Needs: Evidence from Seasonal Firmsen_US
dc.creatorFairhurst, Douglas J.en_US
dc.contributor.authorFairhurst, Douglas J.en_US
dc.date.issued2014-
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractFirms that face seasonal demand account for an important fraction of the U.S. economy. However, there is surprisingly little evidence on these firms' financing decisions. Yet, studying these decisions provides a natural setting to shed light on the types of capital (i.e. cash or debt) that firms use to manage short-term financing needs. Using seasonal firms as a setting to examine this issue, I show that seasonal financing needs are met with debt with low exposure to information asymmetry, such as short-term debt and trade credit. I further show that cash reserves, which have high carrying costs and can at time lead to agency problems, are not used for seasonal financing needs. Further, as financial flexibility theory would predict, I document that seasonal firms maintain more conservative financial policies to increase the ability to use debt for short-term financing needs. Specifically, seasonal firms are less levered and have long-term debt with a longer average maturity. Further, seasonal firms adjust toward leverage targets slower during fiscal quarters when debt is used for short-term financing. Overall, my findings indicate that firms minimize costs associated with short-term financing needs by using debt with low issuance costs and the use of this debt impacts the overall capital structure of the firm.en_US
dc.typetexten
dc.typeElectronic Dissertationen
dc.subjectCash holdingsen_US
dc.subjectSeasonalen_US
dc.subjectWorking capital managementen_US
dc.subjectManagementen_US
dc.subjectCapital stuctureen_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.disciplineManagementen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorKlasa, Sandyen_US
dc.contributor.chairKlasa, Sandyen_US
dc.contributor.committeememberKlasa, Sandyen_US
dc.contributor.committeememberAradhyula, Satheeshen_US
dc.contributor.committeememberKahle, Kathleenen_US
dc.contributor.committeememberLitov, Lubomiren_US
dc.contributor.committeememberWilliams, Ryanen_US
All Items in UA Campus Repository are protected by copyright, with all rights reserved, unless otherwise indicated.