Corporations have accumulated record amounts of cash. We study whether firms' cash retention has been excessive by examining a Korean reform that introduced a new tax on earnings retained as cash. Difference-in-differences tests show that treated firms reduce cash retention and instead increase payouts and investments. Market participants react favorably to the reform, consistent with excessive cash retention. The valuation effects and the alternative uses of the cash are associated with behavioral and agency frictions. Firms that are more subject to behavioral biases increase payouts and experience higher valuations, while poorly governed firms allocate more to investment and experience relatively lower valuations.

中文翻译：

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公司会保留太多现金吗？来自自然实验的证据

公司积累了创纪录数量的现金。我们通过考察一项对留作现金的收益征收新税的韩国改革来研究公司的现金保留是否过多。差分检验表明，经过处理的公司减少了现金保留，反而增加了支出和投资。市场参与者对改革反应良好，与过度保留现金一致。估值效应和现金的替代用途与行为和代理摩擦有关。更容易受到行为偏差影响的公司会增加支出并获得更高的估值，而治理不善的公司将更多的资金分配给投资并获得相对较低的估值。