| dc.description.abstract | This thesis explores the relationship between cash and rm performance. Additionally, the thesis
provides insight into how this relationship varies across di erent time periods and industries.
Using instrumental variable multiple regression analysis, the thesis analyzes accounting data for
a sample of Norwegian rms from 2005-2015. After correcting for a non-linear relationship between
cash and rm performance we nd that i) rm performance for our sample of Norwegian
rms is less a ected by cash than US manufacturing rms, ii) cash has a positive, but weakly
diminishing e ect on rm performance throughout the entire sample period, iii) the relationship
between cash and rm performance is most pronounced pre-recession, iv) rms with high
knowledge intensity have higher cash ratios than rms with lower knowledge intensity, v) cash
has less e ect on rm performance for rms with high knowledge intensity compared to rms
with low knowledge intensity for cash ratios up to 0.4, and vi) cash has a greater e ect on rm
performance for rms in labor intensive industries than in capital intensive industries.
In addition to our analysis results, we provide a thorough discussion of potential pitfalls of OLS
regression and how we account for these. We also attempt to explain all our results in great
detail, focusing on understanding the underlying causality behind the regression estimates. We
conclude that cash indeed has a substantial impact on rm performance and that the importance
of cash is understated in much of the current strategy and nance theory. | nb_NO |
