For a firm that cannot raise external funds, cash on hand serves as precautionary saving. We derive a closed-form expression for the target level of cash on hand in the presence of persistent cash flows. Contrary to conventional wisdom, a mean-preserving increase in the volatility of cash flow can decrease this target. Over the set of admissible parameter values, the average impact of volatility on the target is zero. Endogenous selection, reflecting termination of firms that run out of cash, leads to a positive average impact of volatility on the target level of cash, consistent with empirical findings.

中文翻译：

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财务受限公司的预防性储蓄

对于无法筹集外部资金的公司，手头现金可作为预防性储蓄。在存在持续现金流的情况下，我们推导出手头现金目标水平的封闭式表达式。与传统智慧相反，现金流波动性的均值保持增加会降低该目标。在一组可接受的参数值中，波动对目标的平均影响为零。内生选择反映了现金用完的公司的终止，导致波动对现金目标水平产生积极的平均影响，这与实证结果一致。