报 告 人：Zhou LU（Norwegian School of Economics，Research Scholar）
主 持 人：曹夏平（中山大学岭南学院 副教授）
Firms that face intense product market threats rely less on credit lines but more on cash holdings as the source of liquidity. In the presence of intense market competition, it is critical for firms to respond quickly to valuable investment opportunities. Cash holdings can serve as an immediate and unconditional source of liquidity to fund valuable investment opportunities as soon as they emerge, helping to mitigate product market threats. In contrast, credit lines are less viable because the availability of credit lines is typically conditional on firm performance and firm performance is volatile and hard to predict under intense market competition. I use Capital IQ data to examine the impact of competition on firms’ use of liquidity, in particular, lines of credit. Empirical results suggest that firms that face above-median product market threats are less likely to have a credit line, and have lower amount of unused line as a proportion of total liquidity. Using changes in tariff rates as exogenous variations of product market threats, I establish a causal relationship. In addition, I show that the effect is more profound for firms with lower cash flow, less tangible assets, and higher R&D capital.
Zhou Lu Is a research scholar at Norwegian School of Economics (NHH). He started his PhD study at NHH in 2017, his research interest is empirical corporate finance and behavioral finance. Zhou studied a master in applied economics at the Nanyang Technological University in Singapore and holds bachelor degree with honors in Ming Chuan University in Taiwan.