Analysis of bankruptcy threat for risk management purposes: A model approach

Wieczo ek-Kosmala, Monika; Błach, Joanna; T zęsiok, Joanna A icle Analysis o bank up cy h ea o isk managemen pu poses: A model app oach In e na ional Jou nal o Financial S udies P o ided in Coope a ion wi h: MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel Sugges ed Ci a ion: Wieczo ek-Kosmala, Monika; Błach, Joanna; T zęsiok, Joanna (2018) : Analysis o bank up cy h ea o isk managemen pu poses: A model app oach, In e na ional Jou nal o Financial S udies, ISSN 2227-7072, MDPI, Basel, Vol. 6, Iss. 4, pp. 1-17, h ps://doi.o g/10.3390/ij s6040098 This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/195740 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen (insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en, gel en abweichend on diesen Nu zungsbedingungen die in de do genann en Lizenz gewäh en Nu zungs ech e. Te ms o use: Documen s in EconS o may be sa ed and copied o you pe sonal and schola ly pu poses. You a e no o copy documen s o public o comme cial pu poses, o exhibi he documen s publicly, o make hem publicly a ailable on he in e ne , o o dis ibu e o o he wise use he documen s in public. I he documen s ha e been made a ailable unde an Open Con en Licence (especially C ea i e Commons Licences), you may exe cise u he usage igh s as speci ied in he indica ed licence. h ps://c ea i ecommons.o g/licenses/by/4.0/ In e na ional Jou nal o Financial S udies A icle Analysis o Bank up cy Th ea o Risk Managemen Pu poses: A Model App oach Monika Wieczo ek-Kosmala * , Joanna Błach and Joanna T z˛esiok Facul y o Finance and Insu ance, Uni e si y o Economics in Ka owice, ul. 1 Maja 50, 40-287 Ka owice, Poland; [email p o ec ed] (J.B.); [email p o ec ed] (J.T.) *Co espondence: [email p o ec ed]; Tel.: +48-32-257-77-51 Recei ed: 30 Oc obe 2018; Accep ed: 12 Decembe 2018; Published: 17 Decembe 2018   Abs ac : In p e ious wo ks, he impo ance o isk managemen implemen a ion was add essed wi h ega d o he p oblem o bank up cy h ea , wi h he explana ion o isk impac on highe bank up cy cos s o he unde in es men p oblem. Howe e , he e alua ion o he impac o isk ou comes is echnically linked o isk equency and isk se e i y as he wo dimensions o he isk map. The pu pose o ou s udy is o ad oca e wo addi ional dimensions ha inco po a e liquidi y and/o deb capaci y cons ain in he a e ma h o isk occu ence. In he concep ual dimension, we p opose a model ha may suppo he app op ia e design o isk managemen me hods, by scaling a company’s abili y o sel - esis he isk ou comes. The s udy p o ides he empi ical illus a ion o he equency o he dis inguished pa e ns o isk sel - esis ance. I was ound ha mos equen ly companies ace he limi ed abili y o sel - esis isk ou comes, due o high deb capaci y and high liquidi y cons ain s. We also ound s a is ically signi ican in e dependencies be ween he company’s sec o and he isk sel - esis ance. I suppo s he conclusion ha he le el o liquidi y and deb capaci y cons ain s and hus he abili y o e ain isk ou comes is sec o -speci ic. I has impo an implica ions o he e ec i e design o isk managemen me hods. Keywo ds: bank up cy h ea ; liquidi y cons ain ; cash holdings; deb capaci y cons ain ; le e age; isk managemen ; isk inancing me hods JEL Classi ica ion: D81; M21; G32; G33 1. In oduc ion The p oblems ela ed o bank up cy h ea and bank up cy cos s emain in ocus in nume ous co po a e inance- ela ed wo ks since he seminal wo k o Mille and Modigliani (1958). Bank up cy cos s a e imposed by he implemen a ion o deb o capi al s uc u e, which may in u n inc ease a company’s alue i he e ec s o inancial le e age a e posi i e. Howe e , highe le els o deb in he capi al s uc u e may ul ima ely lead o bank up cy, as he deb capaci y cons ain eme ges. T adi ional analysis o he bank up cy h ea wi h he applica ion o disc iminan models is ocused on he an icipa ion o a bank up cy h ea . Howe e , as no ed by Daily (1994) and la e by Aziz and Da (2006), he models a e o en c i icized o hei eliance solely on a company’s pas pe o mance as pos -measu es. In addi ion, he models ocus on he iden i ica ion o a iables ( a ios) ha allow he de ec ion o symp oms bu no he causes o he a ising bank up cy h ea — his pape con ibu es o his deba e, as i conside s one o he possible easons behind he eme gence o bank up cy h ea ; he impac o isk ou comes. The p oblem was i s add essed by Maye s and Smi h (1982) and MacMinn (1987), who explained he a ionale behind isk managemen wi h e e ence o he indings o co po a e inance heo y ega ding he bank up cy cos s and unde in es men p oblem. Fu he empi ical wo ks con i med In . J. Financial S ud. 2018,6, 98; doi:10.3390/ij s6040098 www.mdpi.com/jou nal/ij s In . J. Financial S ud. 2018,6, 98 2 o 17 ha om he co po a e inance poin o iew, he impac o isk on a company’s pe o mance (and abili y o c ea e alue) is ela ed o he consequences obse ed in he ola ili y o cash lows. Since hen, nume ous s udies examined he impac o he implemen a ion o a ious isk ea men echniques in his con ex . In pa icula , hese s udies e e ed o he nega i e isk ou comes ha lead o undesi ed cash low ola ili y (which is consis en wi h he nega i e concep o isk: isk as a loss). These conclusions we e used o suppo he a ionale behind isk managemen . In pa icula , i was claimed ha he implemen a ion o isk managemen enhances alue c ea ion by he limi a ion o he possible nega i e impac o isk consequences on cash low ola ili y. In o he wo ds, in a gi en company, he ul ima e nega i e consequences o isk occu ence may be mani es ed by cash in lows lowe han expec ed and/o cash ou lows highe han expec ed. This may, in u n, a ec he abili y o main ain inancial liquidi y and inancial balance and, as a consequence, signi ican ly inc ease bank up cy h ea . In his con ex , isk managemen should suppo he selec ion o app op ia e isk managemen echniques, ha will allow smoo hing o he cash low ola ili y in he a e ma h o isk occu ence (e.g., by he implemen a ion o mechanisms ha p o ide an injec ion o cash). Wi h e e ence o p e ious s udies on he impo ance o isk managemen , his s udy aims a p o iding a concep ual amewo k ha may po en ially expand he adi ional iew on isk assessmen and he selec ion o app op ia e isk managemen me hods. A well-designed mix o isk managemen me hods elies on he co ec ness o isk assessmen wi hin he es ima ion o isk equency (p obabili y) and isk se e i y (impac ). These wo ea u es o iden i ied isks a e ypically cap u ed in he p ocess o isk mapping. Mo eo e , wi h e e ence o he ou comes o a isk map, a company should design he op imal isk managemen s a egy. Ou s udy con ibu es o he exis ing li e a u e deba e on isk assessmen by jus i ying he need o include he e alua ion o a company’s abili y o sel - esis he isk ou comes. In ou p oposal, we ollow a co po a e inance app oach, wi h e e ence o wo main cons ain s ela ed o bank up cy h ea : he deb capaci y cons ain and liquidi y cons ain . The p ime aim o his s udy is o ame a concep ual model ha o e s a p oposal o he e alua ion o a company’s isk sel - esis ance, as de e mined by i s deb capaci y cons ain and liquidi y cons ain . The p oposi ion o he concep ual model is suppo ed by empi ical illus a ion, which aims a he obse a ion o he equency o each o he concep ually iden i ied pa e ns o a company’s isk sel - esis ance. In addi ion, he empi ical illus a ion examines he in e dependencies be ween a company’s sec o and he deb capaci y o liquidi y cons ain o indica e he sec o ela i i y. As his s udy ocuses on indica ing he u ili y o bank up cy h ea analysis o a mo e e ec i e selec ion o isk managemen me hods, i p ima ily con ibu es o he li e a u e on he p ope design and implemen a ion o he isk managemen p ocess. Howe e , he s udy also con ibu es o he li e a u e on bank up cy p edic ion, as i places he applica ion o bank up cy analysis in a new dimension—a suppo i e ole in isk managemen . Al hough he bank up cy h ea is he e conside ed only in wo dimensions (liquidi y cons ain and deb capaci y cons ain ), i may enhance u he deba e on he applicabili y o mo e sophis ica ed bank up cy p edic ion ools in his new dimension ( ole). The s udy is o ganized as ollows. In he second sec ion, we e e o he p e ious esea ch and empi ical wo ks ela ed o he explana ion o he a ionale behind isk managemen wi h e e ence o he bank up cy h ea . In pa icula , we ocus on he exis ing explana ion o he posi i e impac o isk managemen on he possible educ ion o bank up cy cos s and he unde in es men p oblem. In he hi d sec ion, we explain he p emises o ou concep ual model o ou pa e ns o a company’s isk sel - esis ance. The easons behind he inclusion o wo addi ional dimensions (deb capaci y cons ain and liquidi y cons ain ) a e discussed wi hin. The concep ual model is also discussed in he decisi e con ex , wi h e e ence o he design o isk managemen me hods. The ou h sec ion p esen s he esea ch design, me hodology, sample, indings, and discussion o he empi ical illus a ion. The i h sec ion concludes he s udy. In . J. Financial S ud. 2018,6, 98 3 o 17 2. Concep ual F amewo k: Bank up cy Th ea as a Ra ionale behind Risk Managemen As no ed by Kloman (2010) and Dionne (2013), he p oblem o isk managemen has ecei ed a en ion since he 1950s; howe e , he i s wo ks we e de o ed o he managemen o insu able isk. Since he 1970s, he discipline o isk managemen has also been conce ned wi h he analysis o in es men isk, inancial ma ke s, and he applica ion o de i a i es. Since he 1990s, we ha e obse ed a eo ien a ion o isk managemen om he silo app oach (a single isk in ocus) o he holis ic app oach, ha pos ula es he inclusion o isk managemen in all o he a eas o decision-making in his alue c ea ion p oblem. Risk managemen in i s s a egic dimension is o en e e ed o as En e p ise Risk Managemen (Dickinson 2001) and has been ollowed by he eme gence o a ious isk managemen s anda ds (Kloman 2010;Pu dy 2010;Powe 2009;Hayne and F ee 2014;Lalonde and Boi al 2012). One o he mos compelling ques ions, howe e , emains why companies decide o manage isk? In he academic deba e, se e al app oaches o his p oblem a e iden i iable. In he beha io al and social con ex , he p oblem is e isi ed h ough he de e minan s o indi idual and manage ial (g oup) decision making unde unce ain y ega ding he impac o isk a e sion (Ou e ille 2014; Slo ic e al. 2004 ;Spi a and Page 2003). Ano he s eam o he li e a u e pe cei es isk managemen in he con ex o a company’s inno a ions in s a egic managemen (Hayne and F ee 2014). Howe e , in his s udy, a hi d con ex is mos ele an — he adop ion o he indings o con empo a y heo y o co po a e inance. To exhibi he a ionale behind he implemen a ion o isk managemen , he capi al s uc u e heo ies a e ecalled wi h e e ence o he explana ion o bank up cy cos s and he unde in es men p oblem. Since he seminal wo k o Mille and Modigliani (1958) ha launched he p emises o s a ic ade-o heo y o le e age, he p oblem o bank up cy h ea and bank up cy cos s has been e isi ed in nume ous empi ical wo ks. One o he mos ele an wo ks emains K aus and Li zenbe ge (1973) who s udied he impac o di ec and indi ec bank up cy cos s in he con ex o he op imal capi al s uc u e. By he implemen a ion o deb o he capi al s uc u e, a company may ge some ax bene i s, bu a he same ime aces he di ec and indi ec cos s o he g owing bank up cy h ea . In gene al, he s a ic ade-o heo y o le e age assumes ha he alue o he le e ed i m emains highe han he alue o he unle e ed i m as long as he bank up cy cos s a e lowe han ax bene i s. These heo e ical conside a ions ga e he impe us o he u he de elopmen o a ious capi al s uc u e heo ies wi hin he con ex o agency ade-o heo y (Jensen and Meckling 1976), signaling heo y (Ross 1977) o pecking o de heo y (Mye s and Majlu 1984). Wi h e e ence o his s eam o li e a u e, he posi i e impac o he implemen a ion o insu ance o de i a i es in hedging unc ion was e isi ed in nume ous empi ical wo ks, e.g., by Smi hson and Simkins (2005); McShane e al. (2011); B omiley e al. (2015); Mikes and Kaplan (2015). The basic p emise o he ea ly wo ks examining he alue-c ea ion po en ial o isk managemen was ha isk a e sion and he ela ed di e si ica ion o isk by he implemen a ion o insu ance o de i a i es canno be a con incing explana ion o why i ms manage isk. These wo ks assumed ha he sepa a ion o owne ship and manage ial con ol (which is an essen ial ea u e o con empo a y co po a ions) o e s a mo e e ec i e isk educ ion by po olio di e si ica ion. Thus, he inancially-o ien ed explana ions o he a ionale behind he managemen o isk ha e u ned o he pa adigms o inancial heo y o explain how insu ance o de i a i es may educe co po a e cos s. Maye s and Smi h (1982) we e he i s o add ess ha isk managemen helps o educe bank up cy cos s. This iew was u he de eloped by MacMinn (1987), who explained he ela ionship be ween managing isk wi h insu ance and sa ings on bank up cy cos s and p esen ed he concep o he highe alue o an insu ed compa ed o an uninsu ed i m (wi h e e ence o he concep o Mille and Modigliani (1958)). In gene al, hese s udies examine he impac o he isk ou comes as a alue-des oying ac o and he ele ance o isk managemen ins umen s (insu ance o de i a i es) in p e en ing he alue-des uc ion impe us. The p oblem is explained in wo ela ed dimensions. Fi s o all, he implemen a ion o isk managemen may enhance he educ ion o bank up cy cos s. F om he capi al p o ide ’s pe spec i e, an insu ed company In . J. Financial S ud. 2018,6, 98 4 o 17 is cha ac e ized by a lowe bank up cy h ea . As a consequence, capi al p o ide s equi e lowe e u ns (and a lowe cos o capi al, ha enhances alue c ea ion). Secondly, he implemen a ion o isk managemen (insu ance o de i a i es) sa egua ds he cash lows and hus allows o ga he in e nal unds o in es men pu poses (g ow h oppo uni ies). This explana ion is de i ed om indings o he pecking o de heo y (Mye s and Majlu 1984) wi h e e ence o he unde in es men p oblem (Mye s 1977). The unp o ec ed company aces a need o aise unds ex e nally, which in u n may incu highe bank up cy cos s due o highe inancial le e age (consis en wi h he s a ic ade-o heo y o le e age). These wo dimensions ( he educ ion o bank up cy cos s and he unde in es men p oblem) a e de i ed om he analysis o he ul ima e consequences o isk, obse able in e ms o he possible cash lows ola ili ies. Fo example, he damage o a company’s physical asse s may lead o cash in lows lowe han expec ed (as he p oduc ion capaci y is limi ed) o cash ou lows highe han expec ed due o he need o es o e damaged asse s. The es o a ion o asse s is ela ed o in es men decision-making and imposes addi ional capi al needs. A lagged e ec o isk ou comes may also be e lec ed by lowe ed cash in lows o highe cash ou lows, wi h he eme gence o indi ec isk consequences. Undesi ed cash low ola ili y (cu en o lagged) aises he need o an injec ion o unds. To some ex en , hese unds migh be ob ained in e nally, om he company’s cash ese es, consis en wi h he indings o a ee-cash- lows hypo hesis (Jensen 1986;Lang e al. 1991). Facing a lack o cash ese es, a company is o ced o ob ain addi ional unds ex e nally. This simple example ou lined abo e leads o he conclusion ha any undesi ed and un o eseen cash low ola ili y (as he ou come o isk) may ul ima ely impose deb capaci y and/o liquidi y cons ain s. Bo h cons ain s signal he eme gence o inancial dis ess. The in e dependencies be ween inancial dis ess, deb capaci y cons ain , and liquidi y cons ain we e add essed in p e ious empi ical s udies. Whi ed (1992) concluded ha deb capaci y cons ain s g ow i i is di icul o ob ain addi ional unding om ex e nal esou ces. Howe e , i is di icul o aise ex e nal capi al by a company unde se e e inancial dis ess. In such ci cums ances, companies use hei cash ese es (Lins e al. 2010;Neam iu e al. 2014). The e is also e idence ha cons ained i ms o i ms wi h a highe business isk end o hold highe cash ese es (Ople e al. 1999; Ha o d 1999 ; Almeida e al. 2004;Ha o d e al. 2008,2011;S eij e s and Niskansen 2013;Han and Qiu 2007; Chen e al. 2015 ;Haushal e e al. 2007;Acha ya e al. 2007;Denis and Sibilko 2010). In o he wo ds, companies acing he ola ili y o cash lows on a egula basis end o hold high le els o liquid asse s o limi he liquidi y cons ain , which is consis en wi h he p emises o p ecau iona y cash holdings i s add essed by Keynes (1936). P ecau iona y cash is cos ly and hus may educe he alue c ea ion capabili ies (Whalen 1966;Di ma e al. 2003;Faulkende and Wang 2006;D’Mello e al. 2008; F esa d 2010;Khieu and Pyles 2012;Ha o d e al. 2014;Chen e al. 2015). In o de o o e come he possible cons ain s ha may eme ge in he a e ma h o isk occu ence, a company should implemen adequa e isk inancing me hods. Companies acing a deb capaci y cons ain and/o liquidi y cons ain should ocus on he possible ou es o ans e he isk. Risk ans e ensu es an injec ion o unds ha will suppo he smoo hing o undesi ed cash low ola ili y. The e en ion o isk (in e nal inancing) is a ailable o companies ha hold p ecau iona y cash and a e no unde deb capaci y cons ain s. 3. Concep ual Model o he Assessmen o Risk Sel -Resis ance: The Fou Pa e ns The iden i ica ion o isk, ollowed by i s assessmen and e alua ion, is a c i ical elemen o he isk managemen p ocess. The assessmen o isk is ela ed o he es ima ion o isk equency (how o en i may happen) and isk se e i y (how high could he possible isk ou comes be). These wo dimensions a e cap u ed in isk maps (Ra li and Hanks 1992;Cox 2008;P i cha d e al. 2010;Thomas 2013). The p ocess o isk mapping con ibu es o he selec ion o he mos app op ia e isk managemen me hods (Walke 2013). Fo example, a isk o high equency and high se e i y should be a oided, i possible. A isk o low equency bu high se e i y is mos sui able o ans e (e.g., by he pu chase In . J. Financial S ud. 2018,6, 98 5 o 17 o insu ance). A isk o low se e i y bu high equency would be di icul o ans e (i ob ainable, he ans e would be e y cos ly), hus in hese ci cums ances a company should implemen me hods o isk p e en ion o educe he equency o isk. Finally, he isk o low se e i y and low equency is a isk ha could be e ained (sel - esis ed) by a company. Howe e , p o ided ha he ul ima e consequences o isk occu ence led o he undesi ed cash low’s ola ili y, he assessmen o isk should ake in o conside a ion he exis ing company’s abili ies o mi iga e cash low ola ili y. In his con ex , we p opose a concep ual model o assessing a company’s isk sel - esis ance. In o he wo ds, ou concep ual model is designed o assis he adi ional assessmen o isk in he equency-se e i y dimension. Unde he assump ion ha undesi ed cash low ola ili y will ul ima ely impose inancial cons ain s and bank up cy h ea (as suppo ed by he li e a u e e iew p o ided in Sec ion 2), we conside in ou model wo addi ional dimensions o assessmen : a company’s deb capaci y cons ain and a company’s liquidi y cons ain . The model is amed in Figu e 1. In . J. Financial S ud. 2018, 6, x FOR PEER REVIEW 6 o 18 Figu e 1. Concep ual model o ou pa e ns o sel - esis ance o isk ou comes. The i s pa e n (squa e A) cap u es companies wi h isk sel - esis ance de e mined by he a ailabili y o in e nal unding. These companies a e cha ac e ized by a high deb capaci y cons ain due o high le e age. These ci cums ances may impose di icul y in ob aining addi ional ex e nal unding (deb in pa icula ) due o high bank up cy cos s and an inc easing bank up cy h ea . Howe e , hese companies possess ela i ely high cash holdings (wi h e e ence o he benchma k). I indica es a low liquidi y cons ain and de e mines he abili y o co e he nega i e inancial ou comes o isk om p e iously accumula ed unds. The second pa e n (squa e B) cap u es companies wi h high- isk sel - esis ance. These companies a e cha ac e ized by bo h a low liquidi y cons ain (due o ela i ely high cash holdings) and low deb capaci y cons ain (due o low le e age). Facing he nega i e ou comes o isk, companies o high- isk sel - esis ance ha e no p oblems wi h ob aining addi ional ex e nal unds and/o use he exis ing cash ese es. These companies a e he leas exposed o a bank up cy h ea in he a e ma h o isk occu ence. The hi d pa e n (squa e C) cap u es companies ha esis on he a ailabili y o ex e nal unds. These companies a e cha ac e ized by ela i ely lowe cash holdings (and hus a highe liquidi y cons ain ). Howe e , he deb capaci y cons ain is ela i ely low as well due o low le e age. This de e mines he abili y o ob ain addi ional unding om ex e nal sou ces i needed. The ou h pa e n (squa e D) cap u es companies ha a e dis inguished by he lowes isk sel - esis ance and hus a e mos p one o a bank up cy h ea in he a e ma h o isk occu ence. These companies a e unde a ela i ely high liquidi y cons ain (due o low cash holdings) and high deb capaci y cons ain (due o high le e age). Ou concep ual model o he analysis o isk sel - esis ance should suppo he decision wi hin he design o isk managemen me hods implemen ed in a company. Fi s o all, i we conside he adi ional di ec ions o isk assessmen (as cap u ed by isk mapping in a isk equency and isk A sel - esis ance o isk ou comes d i en by a ailabili y o in e nal unds, cha ac e ized by: high le e age → high deb capaci y cons ain high cash holdings → low liquidi y cons ain B high sel - esis ance o isk ou comes, cha ac e ized by: low le e age → low deb capaci y cons ain high cash holdings → low liquidi y cons ain C sel - esis ance o isk ou comes d i en by a ailabili y o ex e nal unds, cha ac e ized by: low le e age → low deb capaci y cons ain low cash holdings → high liquidi y cons ain D low sel - esis ance o isk ou comes, cha ac e ized by: high le e age → high deb capaci y cons ain low cash holdings → high liquidi y cons ain Benchma k o cash holdings Benchma k o le e age LIQUIDITY CONSTRAINT low high DEBT CAPACITY CONSTRAINT high low Figu e 1. Concep ual model o ou pa e ns o sel - esis ance o isk ou comes. Ou model is o pa icula impo ance i isk is e ained in he company. Risk e en ion means ha a company solely co e s he nega i e inancial ou comes o isk. In o he wo ds, o alle ia e he undesi ed cash low ola ili ies in he a e ma h o isk occu ence a company needs an injec ion o addi ional unds. I isk is e ained, hese unds may be ob ained: • in e nally, i he e a e adequa e cash ese es in a company, e lec ed by company’s cash holdings in a bu e ing unc ion; his is cap u ed in ou model by he liquidi y cons ain — he highe cash holdings, he lowe liquidi y cons ain ; In . J. Financial S ud. 2018,6, 98 6 o 17 • ex e nally, i a company is able o ob ain addi ional deb 1 ; his is cap u ed in ou model by a deb capaci y cons ain and is consis en wi h he p emises o a s a ic le e age ade-o heo y (as ou lined ea lie , a cons ained i m is p one o highe bank up cy cos s and is unde a highe bank up cy isk)— he highe he le e age, he highe he deb capaci y cons ain . In ou concep ual model, see Figu e 1, we conside ou possible combina ions o liquidi y cons ain (low o high) and deb capaci y cons ain (low o high). Thus, we dis inguished be ween he ou possible pa e ns o a company’s isk sel - esis ance. A high o low liquidi y cons ain and deb capaci y cons ain a e assessed wi h e e ence o he benchma k, which could be es ablished as an a e age le el o cash holdings o le e age ( o a sec o o g oup o simila companies). The i s pa e n (squa e A) cap u es companies wi h isk sel - esis ance de e mined by he a ailabili y o in e nal unding. These companies a e cha ac e ized by a high deb capaci y cons ain due o high le e age. These ci cums ances may impose di icul y in ob aining addi ional ex e nal unding (deb in pa icula ) due o high bank up cy cos s and an inc easing bank up cy h ea . Howe e , hese companies possess ela i ely high cash holdings (wi h e e ence o he benchma k). I indica es a low liquidi y cons ain and de e mines he abili y o co e he nega i e inancial ou comes o isk om p e iously accumula ed unds. The second pa e n (squa e B) cap u es companies wi h high- isk sel - esis ance. These companies a e cha ac e ized by bo h a low liquidi y cons ain (due o ela i ely high cash holdings) and low deb capaci y cons ain (due o low le e age). Facing he nega i e ou comes o isk, companies o high- isk sel - esis ance ha e no p oblems wi h ob aining addi ional ex e nal unds and/o use he exis ing cash ese es. These companies a e he leas exposed o a bank up cy h ea in he a e ma h o isk occu ence. The hi d pa e n (squa e C) cap u es companies ha esis on he a ailabili y o ex e nal unds. These companies a e cha ac e ized by ela i ely lowe cash holdings (and hus a highe liquidi y cons ain ). Howe e , he deb capaci y cons ain is ela i ely low as well due o low le e age. This de e mines he abili y o ob ain addi ional unding om ex e nal sou ces i needed. The ou h pa e n (squa e D) cap u es companies ha a e dis inguished by he lowes isk sel - esis ance and hus a e mos p one o a bank up cy h ea in he a e ma h o isk occu ence. These companies a e unde a ela i ely high liquidi y cons ain (due o low cash holdings) and high deb capaci y cons ain (due o high le e age). Ou concep ual model o he analysis o isk sel - esis ance should suppo he decision wi hin he design o isk managemen me hods implemen ed in a company. Fi s o all, i we conside he adi ional di ec ions o isk assessmen (as cap u ed by isk mapping in a isk equency and isk se e i y dimension), he ou comes o isk could be in en ionally e ained i he isk is classi ied as o low equency and low se e i y. Ou concep ual model is p edominan ly dedica ed o hese pu poses. In such ci cums ances, he assessmen o a company’s isk sel - esis ance helps o es ablish whe he a company is: • able o e ain isk—i ea u ed in squa e B; a company should ocus on he design o he bes isk e en ion policy and implemen a ion o he mos e ec i e me hods; • unable o e ain isk—i ea u ed in squa e D; a company should pay pa icula a en ion o he p ope iden i ica ion and assessmen o isk, ollowed by he design o op imal isk ans e solu ions (i a ailable) and on he possible ou es o he limi a ion o deb capaci y cons ain and liquidi y cons ain ; 1 A company may also ob ain ex e nal unding by he issue o sha es (inc easing equi y). Howe e , in ou concep ual model, we ocus pu ely on he a ailabili y o deb . The eason behind his limi a ion is ha he decision on he issue o new sha es imposes s a egic conce ns due o he po en ial change in he owne ship s uc u e. Mo eo e , he injec ion o addi ional unds om he owne s is conside ed as he ul ima e solu ion (used in e ms o high le e age, leading o una ainabili y o deb ). In . J. Financial S ud. 2018,6, 98 7 o 17 • pa ially able o e ain isk—i ea u ed in squa e A o C; i equi es a simila app oach as in he case o he inabili y o e ain isk. Howe e , a company may also e ain isk unconsciously, acing he nega i e ou comes o isk ha was no ecognized in he p ocess o isk iden i ica ion o was w ongly assessed wi h e e ence o i s equency and/o se e i y. Acco dingly, ou model may also suppo he o e all company’s isk sel - esis ance, wi h he ecommenda ions as ou lined abo e. Ou concep ual model may also enhance a g ea e awa eness o he possible scale o he ul ima e consequences o isk, in e ms o he g ow h o a bank up cy h ea . 4. Empi ical Illus a ion 4.1. Resea ch Design and Me hod and Sample The empi ical illus a ion p esen ed in his sec ion aims a examining he equency o he ou pa e ns o isk sel - esis ance, as dis inguished in ou concep ual model and amed in Figu e 1, wi h e e ence o he ma ke da a ob ained o a sample o companies. In pa icula , we aim a answe ing wo ques ions: Ques ion 1. Which pa e n o isk sel - esis ance is mos common? Ques ion 2. A e he e any signi ican di e ences in he pa e n o isk sel - esis ance in a c oss-sec o dimension? The i s ques ion add esses he equency o each pa e n o isk sel - esis ance. On a concep ual le el, we expec ha pa e ns ea u ed in squa es A and B a e less common due o high le els o cash (as cash holdings a e cos ly o a company). The second ques ion add esses he possible exis ence o c oss-sec o di e ences in he equency o each s a e o isk sel - esis ance. P e ious wo ks con olled he indus y e ec on cash holdings (e.g., Be ge and O ek 1995;Sub amaniam e al. 2011) and capi al s uc u e (e.g., Michaelas e al. 1999;Hall e al. 2000). The u n om he concep ual model, p esen ed in Figu e 1, o empi ical in es iga ion equi es a de ini ion o p oxies ha will clea ly add ess he assessmen o (a) deb capaci y cons ain , (b) liquidi y cons ain , and (c) he benchma ks ha dis inguish be ween high o low cons ain s. Deb capaci y cons ain e e s o he le el o le e age, which is commonly measu ed by he deb o equi y a io (consis en wi h Mille and Modigliani p oposi ion). Howe e , simila in o ma ion could be ob ained by he analysis o he deb o asse s a io. Many o he p e ious empi ical wo ks used bo h a ios o cap u e he inancial le e age e ec in a ious con ex s (Kaplan and Zingales 1997; Lamon e al. 2001;Chen e al. 2009). The liquidi y cons ain is assessed as low i a company is dis inguished by inancial liquidi y. A common measu e o a company’s inancial liquidi y examined in p e ious empi ical wo ks is he ela ionship o cu en asse s o cu en liabili ies o cash and cash equi alen s o cu en liabili ies. Howe e , in he s udies ha e e o he mo i es behind cash holdings (in his p ecau iona y mo i e), o he measu es a e being examined. Fo example, cash holdings o asse s we e examined by Sub amaniam e al. (2011); Ople e al. (1999); Almeida e al. (2004); Ha o d e al. (2008); Weidemann (2018). Wi h e e ence o p e ious empi ical wo ks, ou empi ical illus a ion examines: • deb o o al asse s as a p oxy o he deb capaci y cons ain ; high deb o asse s deno es high le e age and high deb capaci y cons ain ; • cash and cash equi alen s o o al asse s as a p oxy o he liquidi y cons ain ; high cash and cash equi alen s o o al asse s deno es a low liquidi y cons ain and high cash holdings ha could be used in a p ecau iona y (bu e ing) unc ion. In . J. Financial S ud. 2018,6, 98 8 o 17 Finally, bo h p oxies (deb o asse s and cash and cash equi alen s o asse s) a e scaled simila ly and ange be ween 0 (no deb , no cash holdings) o 1 (high deb , high cash holdings) 2 . This enables a clea classi ica ion o each obse a ion o a gi en pa e n and simpli ies he g aphical illus a ion o empi ical esul s wi h e e ence o he concep ual model ou lined in Figu e 1. As he benchma ks, we assumed he mean a ios o all obse a ions in he sample. This app oach is mo i a ed by he common use o means o he gi en inancial a ios as he benchma ks o companies’ pe o mance (e.g., in o icial public s a is ics). In a c oss-sec o dimension, his is ele an o he possible p ac ical implemen a ion o ou concep ual p oposal3. 4.2. Sample In ou empi ical illus a ion, we use a sample o obse a ions ha we e ob ained om he Eme ging Ma ke s In o ma ion Se ice (EMIS) 4 da abase o a i e-yea ime span (2013–2017). To a oid a coun y e ec , we used da a o a single coun y—Poland. Howe e , i is wo h no ing ha he si ua ion in Poland is o en conside ed as ep esen a i e o he egion o Cen al and Eas e n Eu ope (CEE). As a pionee in he ansi ion om a command o a ma ke economy, Poland is cu en ly he la ges economy among all he CEE coun ies and has he six h s onges ma ke in he Eu opean Union. The Polish economy was he only one o ha e a oided ecession du ing he global down u n o 2008 and i con inues o pe o m s ongly5. To cap u e he c oss-sec o dimension, we used in o ma ion on he main ac i i y o companies (as deno ed in he EMIS da abase), consis en wi h Polish indus ial classi ica ion codes (PKD 6 ), o dis inguish be ween p oduc ion, se ices, and ade. The EMIS da abase o e s da a ha a e consis en wi h he balance-shee s a emen and hese da a we e used o compu e he p oxies o he deb capaci y cons ain and liquidi y cons ain . F om all ob ainable obse a ions (2500; 500 i ms in each yea ) we inally selec ed and examined 2292. We emo ed om he sample he obse a ions ha we e inconsis en wi h balance-shee equi emen s (no balance be ween asse s and liabili ies) and he obse a ions ha e lec ed highly unusual le els o p oxies ha could no be easonably explained (e.g., nega i e cash holdings o deb highe han o al asse s). We did no emo e ou lie obse a ions, as in his s udy hese a e ea ed as impo an a ia ions o he obse able pa e ns o isk sel - esis ance. Desc ip i e s a is ics o bo h a iables, liquidi y cons ain and deb capaci y cons ain , a e p esen ed in Tables 1and 2, espec i ely. Dis ibu ion plo s o bo h a iables a e p esen ed in Annex A and B. On a e age, in he analyzed sample, companies hold c.a. 8% o asse s in he o m o cash and cash equi alen s, wi h he highes a e age cash holdings in se ices (c.a. 11%) and he lowes in p oduc ion (c.a. 5%). Howe e , he le els o cash and cash equi alen s holdings, on a e age, highly de ia ed om he mean alues (bo h in he en i e sample and in he sec o s). The dis ibu ion plo s (Appendix A) o liquidi y cons ain s a e igh -skewed, which means ha he sample is domina ed 2 Al hough a e, he deb o asse s a io can be g ea e han 1. Howe e , in his s udy we excluded such cases (which is discussed in he sample selec ion). 3 In some empi ical wo ks he median is used. Howe e , hese wo ks aim a di iding he sample in o wo pa s ha dis inguish wi h e.g., high o low cash holdings. See Demonie e al. (2015) wi h he analysis o he empi ical wo ks ollowing he app oach p oposed by Fazza i e al. (1988) and Kaplan and Zingales (1997). 4 The EMIS da abase p esen s indus y in o ma ion, company p o iles, epo s, and inancial da a, as well as mac oeconomic s a is ics and o ecas s o eme ging ma ke s in Asian, La in Ame ican, and Cen al and Eas e n Eu opean coun ies. De ailed in o ma ion on he da abase is a ailable online (EMIS n.d.). 5 Acco ding o Wo ld Bank, Polish eal GDP (G oss Domes ic P oduc ) g ow h is expec ed o each 4.7% in 2018, d i en by domes ic consump ion and accele a ing in es men s. Unemploymen a a a e o sligh ly abo e 4%, is he second-lowes a e in he 28-membe Eu opean Union (Wo ld Bank n.d.;Eme ging Eu ope n.d.) Business demog aphy da a indica e he g owing numbe o bank up cies (900 companies in 2017). Howe e , he numbe o bank up cies is ela i ely low in compa ison o he o al numbe o en i ies conduc ing economic ac i i y in Poland (S a is ics Poland 2018;Neh ebecka and Dzik 2013). 6 The PKD (Polska Klasy ikacja Działalno´sci—Polish Indus ial Classi ica ion) sys em is consis en wi h NACE e . 2 (S a is ical Classi ica ion o Economic Ac i i ies in he Eu opean Communi y) and uses digi coding wi h a e y de ailed explana ion o he a eas o a company’s ope a ing ac i i y. The companies we e g ouped wi h e e ence o hei PKD codes and classi ied o one o he la gely unde s ood sec o s (in his case p oduc ion, ade, o se ices). In . J. Financial S ud. 2018,6, 98 15 o 17 Daily, Ca he ine M. 1994. Bank up cy in S a egic S udies: Pas and P omise. Jou nal o Managemen 20: 263–95. [C ossRe ] Demonie , Gladyson, Jose Elias Fe es de Almeida, and Pa icia Ma ia Bo olon. 2015. The impac o inancial cons ain s on accoun ing conse a ism. Re iew o Business Managemen 17: 1246–78. [C ossRe ] Denis, Da id J., and Vele ij Sibilko . 2010. Financial cons ain s, in es men , and he alue o cash holdings. Re iew o Financial S udies 23: 247–69. [C ossRe ] Dickinson, Ge y. 2001. En e p ise Risk Managemen : I s O igins and Concep ual Founda ion. The Gene a Pape s on Risk and Insu ance. Issues and P ac ice 26: 360–66. A ailable online: h ps://www.js o .o g/s able/41952578 (accessed on 6 Oc obe 2018). [C ossRe ] Dionne, Geo ges. 2013. Risk Managemen : His o y, De ini ion, and C i ique. Risk Managemen and Insu ance Re iew 16: 147–66. [C ossRe ] Di ma , Amy, Jan Mah -Smi h, and Hen i Se aes. 2003. In e na ional co po a e go e nance and co po a e cash holdings. Jou nal o Financial Quan i a i e Analysis 38: 111–33. [C ossRe ] Eme ging Eu ope. n.d. A ailable online: h ps://eme ging-eu ope.com/polish-economy-in es -gdp-g ow h/ (accessed on 12 No embe 2018). EMIS. n.d. A ailable online: h ps://www.emis.com/php/s o e/ (accessed on 12 No embe 2018). Faulkende , Michael, and Rong Wang. 2006. Co po a e inancial policy and he alue o cash. Jou nal o Finance 61: 1957–90. [C ossRe ] Fazza i, S e en M., Robe G. Hubba d, and B uce C. Pe e sen. 1988. Financing cons ain s and co po a e in es men . B ooking Pape s on Economic Ac i i y 1: 141–95. A ailable online: h ps://www.b ookings. edu/wp-con en /uploads/1988/01/1988a_bpea_ azza i_hubba d_pe e sen_blinde _po e ba.pd (accessed on 30 Sep embe 2018). [C ossRe ] F esa d, Lau en . 2010. Financial s eng h and p oduc ma ke beha io : The eal e ec s o co po a e cash holdings. The Jou nal o Finance 65: 1097–122. [C ossRe ] Hall, G aham, Pa ick Hu chinson, and Nicos Michaelas. 2000. Indus y E ec s on he De e minan s o Unquo ed SMEs’ Capi al S uc u e. In e na ional Jou nal o he Economics o Business 7: 297–312. [C ossRe ] Han, Seungjin, and Jiaping Qiu. 2007. Co po a e p ecau iona y cash holdings. Jou nal o Co po a e Finance 13: 43–57. [C ossRe ] Ha o d, Ja ad. 1999. Co po a e cash ese es and acquisi ions. The Jou nal o Finance 54: 1969–97. [C ossRe ] Ha o d, Ja ad, Sa a A. Mansi, and William F. Maxwell. 2008. Co po a e go e nance and i m cash holdings in he U.S. Jou nal o Financial Economics 87: 535–55. [C ossRe ] Ha o d, Ja ad, Sandy Klasa, and William F. Maxwell. 2014. Re inancing isk and cash holdings. The Jou nal o Finance 69: 975–1012. [C ossRe ] Hause , John R., and F ank S. Koppelman. 1979. Al e na i e Pe cep ual Mapping Techniques: Rela i e Accu acy and Use ulness. Jou nal o Ma ke ing Resea ch 16: 495–506. A ailable online: h ps://pd s.seman icschola . o g/3555/1906ec3878e70820 db049d5ebebbbc72ae0.pd (accessed on 12 No embe 2018). [C ossRe ] Haushal e , Da id, Sandy Klasa, and William F. Maxwell. 2007. The in luence o p oduc ma ke dynamics on isk managemen policies. Jou nal o Financial Economics 84: 797–825. [C ossRe ] Hayne, C is ine, and Clin on F ee. 2014. Hyb idized p o essional g oups and ins i u ional wo k: COSO and he ise o en e p ise isk managemen . O ganiza ions and Socie y 39: 309–30. [C ossRe ] Jensen, Michael C. 1986. Agency cos s o ee cash low, co po a e inance and akeo e s. The Ame ican Economic Re iew 76: 323–29. A ailable online: h ps://www.js o .o g/s able/1818789 (accessed on 5 Oc obe 2018). Jensen, Michael C., and William H. Meckling. 1976. Theo y o he i m: Manage ial beha io , agency cos s and owne ship s uc u e. Jou nal o Financial Economics 3: 305–60. [C ossRe ] Kaplan, S e en, and Luigi Zingales. 1997. Do inancing cons ain s explain why in es men s is co ela ed wi h cash low? Qua e ly Jou nal o Economics 112: 169–215. [C ossRe ] Keynes, John M. 1936. The Gene al Theo y o Employmen , In e es and Money. London: Macmillan, ISBN 978-0-230-00476-4. Khieu, Hinh D., and Ma k K. Pyles. 2012. The in luence o c edi a ing change on co po a e cash holdings and hei ma ginal alue. Financial Re iew 47: 351–73. [C ossRe ] Kloman, Felix H. 2010. A b ie his o y o isk managemen . In En e p ise Risk Managemen . Today’s Leading Resea ch and Bes P ac ices o Tomo ow’s Execu i es. Edi ed by John F ase and Be y J. Simkins. Hoboken: John Wiley & Sons, pp. 19–29, ISBN 978047049908. [C ossRe ] In . J. Financial S ud. 2018,6, 98 16 o 17 K aus, Alan, and Robe H. Li zenbe ge . 1973. A s a e-p e e ence model o op imal inancial le e age. The Jou nal o Finance 28: 911–22. [C ossRe ] Lalonde, Ca ole, and Oli ie Boi al. 2012. Managing isks h ough ISO 31000: A c i ical analysis. Risk Managemen 14: 272–300. [C ossRe ] Lamon , Owen, Ch is ophe Polk, and Jesús Saaá-Requejo. 2001. Financial cons ain s and s ock e u ns. The Re iew o Financial S udies 14: 529–54. [C ossRe ] Lang, La y, Ralph Walkling, and RenéM. S ulz. 1991. A Tes o he F ee Cash Flow Hypo hesis: The Case o Bidde Re u ns. Jou nal o Financial Economics 29: 315–35. [C ossRe ] Lins, Ka l V., Hen i Se aes, and Pe e Tu ano. 2010. Wha d i es co po a e liquidi y? An in e na ional su ey o cash holdings and lines o c edi . Jou nal o Financial Economics 98: 160–76. [C ossRe ] MacMinn, Richa d D. 1987. Insu ance and Co po a e Risk Managemen . The Jou nal o Risk and Insu ance 54: 658–77. [C ossRe ] Maye s, Da id, and Cli o d W. Smi h. 1982. On he co po a e demand o insu ance. The Jou nal o Business 55: 281–96. [C ossRe ] McShane, Michael, Anil Nai , and Elzo bek Rus ambeko . 2011. Does En e p ise Risk Managemen Inc ease Fi m Value? Jou nal o Accoun ing, Audi ing and Finance 26: 641–58. [C ossRe ] Michaelas, Nicos, F ancis Chi enden, and Panikkos Pou ziou is. 1999. Financial policy and capi al s uc u e choice in UK SMEs: Empi ical e idence om company panel da a. Small Business Economics 12: 113–30. [C ossRe ] Mikes, Ane e, and Robe S. Kaplan. 2015. When One Size Doesn’ Fi All: E ol ing Di ec ions in he Resea ch and P ac ice o En e p ise Risk Managemen . Jou nal o Applied Co po a e Finance 27: 37–40. [C ossRe ] Mille , Me on H., and F anco Modigliani. 1958. The Cos o Capi al, Co po a ion Finance and he Theo y o In es men . The Ame ican Economic Re iew 48: 261–97. A ailable online: h ps://www.js o .o g/s able/ 1809766 (accessed on 5 Oc obe 2018). Mye s, S ewa C. 1977. De e minan s o co po a e bo owings. Jou nal o Financial Economics 5: 147–75. [C ossRe ] Mye s, S ewa C., and Nicholas S. Majlu . 1984. Co po a e inancing and in es men decisions when i ms ha e in o ma ion ha in es o s do no ha e. Jou nal o Financial Economics 13: 187–221. [C ossRe ] Neam iu, Monica, Nemi Sh o , Hal D. Whi e, and Ch is ophe D. Williams. 2014. The Impac o Ambigui y on Manage ial In es men and Cash Holdings. Jou nal o Business Finance and Accoun ing 41: 1071–99. [C ossRe ] Neh ebecka, Na alia, and Ane a Ma ia Dzik. 2013. Business Demog aphy in Poland: Mic oeconomic and Mac oeconomic De e minan s o Fi m Su i al. Wo king Pape , Facul y o Economic Sciences. Wa saw, Poland: Uni e si y o Wa saw. A ailable online: h p://www.wne.uw.edu.pl/ iles/1813/9636/8885/WNE_ WP93_2013.pd (accessed on 12 No embe 2018). Ople , Tim, Lee Pinkowi z, RenéM. S ulz, and Rohan Williamson. 1999. The de e minan s and implica ions o co po a e cash holdings. Jou nal o Financial Economics 52: 3–46. [C ossRe ] Ou e ille, J. F ançois. 2014. Risk A e sion, Risk Beha io , and Demand o Insu ance: A Su ey. Jou nal o Insu ance Issues 37: 158–86. A ailable online: h ps://www.js o .o g/s able/43151298 (accessed on 6 Oc obe 2018). [C ossRe ] Powe , Michael. 2009. The isk managemen o no hing. Accoun ing, O ganiza ions and Socie y 34: 849–55. [C ossRe ] P i cha d, Da id, Pa ick L. Yo k, Sco Bea ie, and Don Hannegan. 2010. D illing Haza d Managemen : The Value o Risk Assessmen . Wo ld Oil 231: 43–52. A ailable online: h ps://www.success ul-ene gy.com/wp- con en /uploads/2011/02/WO1010_Se ies_2_Final.pd (accessed on 30 Oc obe 2018). Pu dy, G an . 2010. ISO 31000:2009—Se ing a New S anda d o Risk Managemen . Risk Analysis 30: 881–86. [C ossRe ] Ra li , Richa d, and S e en Hanks. 1992. E alua ing Risk. Manage ial Audi ing Jou nal 7: 26–32. [C ossRe ] Ross, S ephen A. 1977. The De e mina ion o Financial S uc u e: The Incen i e-Signaling App oach. The Bell Jou nal o Economics 8: 23–40. A ailable online: h p://www.js o .o g/s able/3003485 (accessed on 6 Oc obe 2018). [C ossRe ] Slo ic, Paul, Melissa L. Finucane, Ellen Pe e s, and Donald G. MacG ego . 2004. Risk as Analysis and Risk as Feelings: Some Though s abou A ec , Reason, Risk, and Ra ionali y. Risk Analysis 24: 311–22. [C ossRe ] Smi hson, Cha les, and Be y J. Simkins. 2005. Does isk managemen add alue? A su ey o he e idence. Jou nal o Applied Co po a e Finance 17: 8–17. [C ossRe ] In . J. Financial S ud. 2018,6, 98 17 o 17 Spi a, Lau a F., and Michael Page. 2003. Risk managemen : The ein en ion o in e nal con ol and he changing ole o in e nal audi . Accoun ing, Audi ing & Accoun abili y Jou nal 16: 640–61. [C ossRe ] S a is ics Poland. 2018. S uc u al Changes o G oups o he Na ional Economy En i ies in he REGON Regis e 2017. A ailable online: h p://s a .go .pl/obsza y- ema yczne/podmio y-gospoda cze-wyniki- inansowe/ zmiany-s uk u alne-g up-podmio ow/zmiany-s uk u alne-g up-podmio ow-gospoda ki-na odowej- w- ejes ze- egon-2017- ok,1,21.h ml (accessed on 12 No embe 2018). S eij e s, Tensie, and Me i Niskansen. 2013. The de e minan s o cash holdings in p i a e amily i ms. Accoun ing and Finance 53: 537–60. [C ossRe ] Sub amaniam, Venka , Tony Tang, Heng Yue, and Xin Zhou. 2011. Fi m s uc u e and co po a e cash holdings. Jou nal o Co po a e Finance 17: 759–71. [C ossRe ] Thomas, Philip. 2013. The Risk o Using Risk Ma ices. Mas e ’s hesis, Uni e si y o S a ange , S a ange , No way. A ailable online: h ps://b age.bibsys.no/xmlui/handle/11250/183575 (accessed on 25 Oc obe 2018). Walke , Russel. 2013. Winning wi h Risk Managemen . London: Wo ld Scien i ic Publishing Co., ISBN 978-981438882. Weidemann, Felix. 2018. A s a e-o - he-a e iew o co po a e cash holding esea ch. Jou nal o Business Economics 88: 765–97. [C ossRe ] Whalen, Edwa d L. 1966. A a ionaliza ion o p ecau iona y demand o cash. The Qua e ly Jou nal o Economics 80: 314–24. [C ossRe ] Whi ed, Toni M. 1992. Deb , liquidi y cons ain s, and co po a e in es men : E idence om panel da a. Jou nal o Finance 47: 1425–60. [C ossRe ] Wo ld Bank. n.d. A ailable online: h ps://www.wo ldbank.o g/en/coun y/poland/o e iew#4 (accessed on 12 No embe 2018). © 2018 by he au ho s. Licensee MDPI, Basel, Swi ze land. This a icle is an open access a icle dis ibu ed unde he e ms and condi ions o he C ea i e Commons A ibu ion (CC BY) license (h p://c ea i ecommons.o g/licenses/by/4.0/).