Firms cash management, adjustment cost and its impact on firms’ speed of adjustment-A cross country analysis

Qazi Awais Amin, Tom Williamson

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
43 Downloads (Pure)


We investigate the firms’ specific attributes that determine the difference in speed of adjustment (SOA) towards the cash holdings target in the Scandinavian countries: Denmark, Norway and Sweden. We examine whether Scandinavian firms maintain an optimal level of cash holdings and determine if the active cash holdings management is associated with the firms’ higher SOA and lower adjustment costs. Our findings substantiate that a higher level of off-target cost induces professional managers to rebalance their cash level towards the optimal balance of cash holdings. Our results reveal that Scandinavian firms accelerate SOA towards cash targets primarily for the precautionary motive. Moreover, our results show that SOA is heterogeneous across Scandinavian firms based on adjustment cost and deviate cash holdings towards the target mainly with the support of internal financing. Furthermore, our empirical findings show that the SOA of Norwegian firms is significantly higher than the Danish and Swedish firms.

Original languageEnglish
Pages (from-to)53-89
Number of pages37
JournalReview of Quantitative Finance and Accounting
Issue number1
Early online date8 May 2020
Publication statusPublished - Jan 2021

Bibliographical note

The final publication is available at Springer via

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.


  • Cash holdings
  • GMM
  • Scandinavian countries
  • Speed of adjustment
  • Trade-off theory

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)
  • Finance


Dive into the research topics of 'Firms cash management, adjustment cost and its impact on firms’ speed of adjustment-A cross country analysis'. Together they form a unique fingerprint.

Cite this