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Multinational Conglomerates and the Financing Choices of U.S. Firms

11 March 2015
San Francesco - Via della Quarquonia 1 (Classroom 2 )
U.S. corporations are holding record-high amounts of cash while at the same time their investment to cash flï¿½ow sensitivity, often considered a proxy of ï¿½financial constraints, is dwin- dling. Both these phenomena date back before the crisis. While different independent explanations for each of these two fiï¿½ndings have been proposed, no systematic analysis has been undertaken on whether (and how) the two phenomena are related, and why they have prominently emerged after the mid-1990s. In this paper we show how the increasing organization of production across national borders of U.S. corporations can play a role in jointly explaining these two apparently inconsistent financing choices