This study employs the average cash-savings rate, defined as the ratio of the increase in cash to issue proceeds, in exploring the forces that shape cash savings in equity issues. The marginal cash-savings rate (e.g., as high as 0.6 in McLean, 2011) overstates equity issuers’ actual cash-savings rates by a wide margin. The average cash-savings rate increases with issue size and market-to-book, decreases with cash holdings, and has an inverted-U-shaped relation with sales growth. Equity-issuing firms do not prioritize cash savings over other uses like operating expenses, suggesting that cash is probably a side-show. Previously documented virtuous effects of cash all but disappear if we remove equity-issuing firms from the sample.​

JEL classification: G30, G31, G32

Key words: Equity issuance, cash savings, cash holdings, operating expenses, market-to-book​