Why do companies hold cash?

Summary This thesis investigates several aspects of cash holding in French and European companies. First, this research shows that holding cash allows growth firms to finance investment opportunities. While it allows mature companies to distribute dividends to their shareholders and increase resources under the control of management. Its impact on the market value of firms is positive for growth firms and negative for mature firms. Second, this thesis explains the importance of the cash position of American firms compared to European firms by highlighting the role of the differentiated evolution of the main determinants of the cash position as well as the existence of differences in sectoral composition in these two markets. Finally, this work shows that the reason for holding cash in French firms depends on their mode of governance. Moreover, the quality of governance is strongly correlated with the degree of firms' financial constraints. The largest firms, which are the least financially constrained and therefore hold low levels of cash, implement anti-takeover mechanisms leading to a low measure of governance quality.