We explore the forces that drive cash savings in equity issuance using the average cash-savings rate instead of the marginal cash-savings rate that overstates individual issuers’ cash savings. Equity issuers with high investment opportunities save more cash in anticipation of greater cash needs from fast post-issue growth. The precautionary motive, cash shortfalls, or market-timed equity issuance have limited influence on equity issuers’ cash savings decisions. Much of the previously documented virtuous effects of cash reflect hallmark characteristics of equity issuance, suggesting that the intrinsic value of cash is probably lower than indicated by previous research.
