The Real Effects of Exchange Traded Funds

Li, Frank Weikai; Li, Xuewen; Sun, Chengzhu

doi:10.2139/ssrn.3129369

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2018

2023

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Cited by 4 publications

(2 citation statements)

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“…Furthermore, Li et al. (2018) show that ETF ownership positively impacts a firm's investment sensitivity to its stock price.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Do exchange traded funds affect corporate cash holdings?

Lin,

Mei,

Tan

et al. 2023

Business Fin & Account

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We examine the effects of equity ownership by exchange traded funds (ETFs) on corporate cash holdings. We find that firms increase their cash holdings in response to higher anticipated risks generated by ETFs. To establish a causal interpretation, we use the Russell 1000/2000 index reconstitution as an instrument for ETF ownership. We further show that shareholders place a higher value on the additional cash held by firms with higher ETF ownership. These findings are more pronounced among financially constrained firms. Overall, our results suggest that firms hold more precautionary cash to mitigate future funding needs due to higher ETF‐induced risks.

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“…Furthermore, Li et al. (2018) show that ETF ownership positively impacts a firm's investment sensitivity to its stock price.…”

Section: Introductionmentioning

confidence: 99%

“…(2019) find that ETF ownership increases the stock liquidity of the underlying stocks in the ETF's basket. Furthermore, Li et al (2018) show that ETF ownership positively impacts a firm's investment sensitivity to its stock price.…”

mentioning

confidence: 99%