Does Common Ownership Affect the Value of Cash Holdings?

Using a sample of US publicly traded firms from 1981 to 2018, we find that common ownership positively affects the value of cash holdings. The finding is robust to subperiods, alternative methods of calculating the value of cash holdings, different types of institutional investors and the level of investor distraction. Further analysis indicates that the industry expertise of common owners is an important channel that explains the effect of common ownership on the value of cash holdings. We also find that common ownership has explanatory power for the upward trend of the marginal value of cash in recent decades.