Marketable Securities: Storage or Investment?

56 Pages Posted: 12 Aug 2009 Last revised: 20 Oct 2014

See all articles by Craig Brown

Craig Brown

Purdue University - Department of Finance

Date Written: October 15, 2014


Corporate liquidity demand models view investments in marketable securities as a relatively simple store of excess liquidity (the storage view). However, compared to excess cash, marketable securities have more in common with investment and payout. For firms with repatriation tax exposure, constrained to a limited payout and permanent foreign real-investment plans, the average coefficient difference between excess cash and market investment regressions is zero. For all firms, the difference is 12%. The findings suggest that market investment is no longer a passive store of excess liquidity. Rather, market investment is associated with general investment and liability-driven investment.

Keywords: Market Investment, Liability-Driven Investment, Payout Policy, International Taxation

JEL Classification: G11, G31, G32, G35

Suggested Citation

Brown, Craig O., Marketable Securities: Storage or Investment? (October 15, 2014). Available at SSRN: or

Craig O. Brown (Contact Author)

Purdue University - Department of Finance ( email )

West Lafayette, IN 47907-1310
United States


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