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Cited by 184

The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.

What do Firms do with Cash Windfalls?

Open access
Blanchard, Olivier, Lopez-de-Silane, Florencio·1993·National Bureau of Economic Research
DOI 10.3386/w4258
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Abstract

Suppose that a firm receives a cash windfall which does not change its investment opportunity set, or equivalently its marginal Tobin's Q. What will this firm do with the money? We provide empirical answers to this question using a sample of firms with such windfalls in the form of a won or settled lawsuit. We examine a variety of decisions of the firm to shed light on alternative theories of corporate financing and investment. Our evidence is broadly inconsistent with the perfect capital markets model. The results need to be stretched considerably to fit the asymmetric information model in which managers act in the interest of shareholders. The evidence supports the agency model of managerial behavior, in which managers try to ensure the long run survival and independence of the firms with themselves at the helm.

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Metadata

Authors
Blanchard, O., & Lopez-de-Silane, F.
Venue
National Bureau of Economic Research
Publisher
National Bureau of Economic Research
Published
1993-01
DOI
10.3386/w4258
OpenAlex
W2043607849
Cited by
184
References
1
Type
report
Language
en
Open access
green

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CoChat. (2026). Citation check: What do Firms do with Cash Windfalls? https://app.cochat.ai/papers/10.3386/w4258
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Blanchard, O., & Lopez-de-Silane, F. (1993). What do Firms do with Cash Windfalls? National Bureau of Economic Research. https://doi.org/10.3386/w4258

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