Operating Lease Obligations and Corporate Cash Management

36 Pages Posted: 6 Jun 2017 Last revised: 7 Jun 2021

See all articles by Douglas O. Cook

Douglas O. Cook

University of Alabama - Culverhouse College of Commerce & Business Administration

Robert L. Kieschnick

University of Texas at Dallas

Rabih Moussawi

Villanova University - Department of Finance; University of Pennsylvania - The Wharton School

Date Written: September 1, 2020

Abstract

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

Cook, Douglas O. and Kieschnick, Robert L. and Moussawi, Rabih, Operating Lease Obligations and Corporate Cash Management (September 1, 2020). Available at SSRN: https://ssrn.com/abstract=2980895 or http://dx.doi.org/10.2139/ssrn.2980895

Douglas O. Cook

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States
205-348-8971 (Phone)
205-348-0590 (Fax)

Robert L. Kieschnick (Contact Author)

University of Texas at Dallas ( email )

800 W. Campbell Rd, SM31
Richardson, TX 75080
United States
972-883-6273 (Phone)

HOME PAGE: http://www.utdallas.edu/~rkiesch/

Rabih Moussawi

Villanova University - Department of Finance ( email )

800 E Lancaster Ave
Bartley Hall, 2051
Villanova, PA 19085
United States

HOME PAGE: http://www.homepage.villanova.edu/rabih.moussawi

University of Pennsylvania - The Wharton School ( email )

United States

HOME PAGE: http://www.rabihmoussawi.com/

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