Liquidity Management During the COVID-19 Pandemic
Asia-Pacific Journal of Financial Studies, Forthcoming
23 Pages Posted: 12 Jan 2021
Date Written: December 15, 2020
Abstract
With the help of the US government and committed funding from bank credit lines, the US corporate sector responded to the COVID-19 cash flow shock by issuing long-term debt to increase cash holdings. I use a case study, evidence from recent research and a theoretical model to explain the logic behind the changes in corporate financial policy that happened during 2020, and to discuss the importance of US government policies to support the market for long-term debt. I also point out to open research questions about liquidity management, in particular questions that were highlighted by how companies reacted to the COVID-19 pandemic.
Keywords: Cash, credit lines, Coronavirus, debt, financial markets
JEL Classification: G31, G32
Suggested Citation: Suggested Citation