Corporate Uses of Cash
& Subsequent Investment Returns
The DeMarche Corporate Uses of Cash Study is unique in the fact that there have been no academic or practitioner studies that have addressed this topic by examining all of the most popular uses of corporate cash over long time periods. Past studies have 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 extended this body of research by examining subsequent stock performance over a 22 year time period spanning from 1990 – 2011, and have since updated the study annually. In addition, DeMarche looked at the effectiveness of the major uses of cash by differing market cap sizes and stock styles (growth and value) to see whether or not these important drivers of stock price made a difference.
In the study, over 4,000 stocks were analyzed for subsequent one, three, and five-year average annualized return performance for five different cash usage strategies. Within each of the cash usage categories, return performance was analyzed by categories of market cap size, by stock style designations, by economic sector and industry.
If you are prioritizing projects for funding or balancing cash investments between internal and external stakeholder needs, the DeMarche Corporate Uses of Cash database will provide you with invaluable information to understand stock return and valuation ramifications of your cash deployment choices.