This study directly investigates the relationship between the firm’s information environment and its cash holding decision using two separate country-level events as proxies for a general improvement of the information environment: the initial enforcement of new insider trading laws and the mandatory adoption of International Financial Reporting Standards. Analysing a large international sample, we find that firms reduce their cash holdings after both exogenous information shocks. We also find that the reductions are greater for firms facing greater financing constraints and agency issues, and for those for which the informational shocks are stronger. Further analyses reveal a reduction in firms’ average cash savings rate, an increase in performance, an increase in the use of external debt, a decrease in abnormal investment, and an increase in the value of cash holdings. Taken together, our results suggest that an improvement in the information environment mitigates both the adverse selection and moral hazard problems thereby, leading to a reduction in cash reserves held for transaction and precautionary motives, and the likelihood of entrenched managers building large cash balances for private benefit.

这项研究使用两个单独的国家级事件作为信息环境的总体改善的代理，直接调查了公司信息环境与现金持有决策之间的关系：新的内幕交易法律的初步执行和国际财务报告的强制采用标准。通过分析大量的国际样本，我们发现企业在两次外部信息冲击后都减少了现金持有量。我们还发现，对于面临更大融资约束和代理问题的公司，以及信息冲击更大的公司，减少幅度更大。进一步的分析表明，公司的平均现金储蓄率下降，绩效提高，外债使用增加，异常投资减少，以及现金持有量的增加。综上所述，我们的结果表明，信息环境的改善同时缓解了逆向选择和道德风险问题，从而减少了为交易和预防目的而持有的现金储备，以及根深蒂固的管理人员为私人积累大量现金余额的可能性效益。