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DeMarche Corporate Uses of Cash White Paper
Cash usage is a key topic of interest to investors and
management. DeMarche Associates initiated a study in early 2005 of how
companies tend to use their cash in general and how well these strategies have
paid off in terms of subsequent stock returns. We update the study each
year.
There have been few academic or practitioner studies that have
addressed this topic by examining all of the most popular uses of corporate
cash at the same time over long time periods. Other studies have mainly tended
to look at future returns associated with one or two of the major cash usage
categories over time periods spanning a decade or less. DeMarche has extended
this body of research to date by examining subsequent stock performance over a
17 year time period spanning from 1990 - 2006. In addition, DeMarche looked at
the effectiveness of the major uses of cash by differing market cap sizes,
stock styles and sector/industry to see whether or not these important drivers
of stock price made a difference to the use of cash results.
Click below to download the entire Uses of Cash white paper in .pdf format.
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