Operating Lease Obligations and Corporate Cash Management
36 Pages Posted: 6 Jun 2017 Last revised: 7 Jun 2021
Date Written: September 1, 2020
Our study addresses two issues overlooked in prior research: Does a firm’s future operating lease obligations influence its current cash holdings? Does this relationship contribute to the temporal increase in corporate cash holdings? We provide evidence that these future obligations significantly influence a firm’s cash holdings and contribute to the temporal increase in U.S. corporate cash holdings. Consequently, our findings are consistent with the options offered by operating leases to young growing firms and the effect of these operating lease obligations on the firm’s operating leverage.
Keywords: Operating Leases, Cash Management
JEL Classification: M41, G12, G32
Suggested Citation: Suggested Citation