2026-05-07T23:33:52Zhttps://riubu.ubu.es/oai/requestoai:riubu.ubu.es:10259/115792026-05-06T00:05:36Zcom_10259_8641com_10259_5086com_10259_2604col_10259_8642
Elvira Lorilla, Teresa
905
600
0000-0002-6730-5154
García Rodríguez, Íñigo
215
600
0000-0003-2662-8018
Romero Merino, María Elena
675
600
0000-0003-0920-4950
Santamaría Mariscal, Marcos
676
600
0000-0002-2564-7017
2026-05-05T11:56:45Z
2026-05-05T11:56:45Z
2026-04
0267-4424
https://hdl.handle.net/10259/11579
10.1111/faam.70035
1468-0408
This study examines the dual impact of excess cash holdings on the financial vulnerability of nonprofit organizations (NPOs) through an integrative framework that combines insights from the behavioral theory of the firm and agency theory. From a behavioral perspective, excess liquid assets represent unabsorbed organizational slack that can enhance financial resilience by buffering organizations against funding shocks. From an agency perspective, however, unusually high cash balances may be absorbed into administrative structures, increasing internal costs and weakening financial discipline. Using a large panel dataset of 9177 NPOs in England and Wales (42,350 observations from 2015 to 2022) and generalized structure equation modeling, we find that excess cash is directly associated with a lower likelihood of future financial vulnerability, consistent with its precautionary role as a financial buffer. At the same time, excess cash is associated with higher overhead costs, which in turn slightly increase financial vulnerability. This indirect channel partially offsets, but does not eliminate, the protective effect of excess liquidity. Overall, the findings show that excess cash can strengthen nonprofit financial resilience while simultaneously generating internal cost dynamics that attenuate its benefits. By distinguishing between unabsorbed and absorbed slack, the study clarifies how liquidity accumulation can have both stabilizing and potentially adverse consequences for nonprofit financial health.
This study was supported by the Spanish Ministry of Science and Innovation under Grant PID2022-139777NB-I00.
eng
Wiley
Financial Accountability & Management. 2026,
https://doi.org/10.1111/faam.70035
Atribución 4.0 Internacional
http://creativecommons.org/licenses/by/4.0/
info:eu-repo/semantics/openAccess
Excess cash holdings
Financial vulnerability
Mediation
Nonprofit organizations
Overhead
Organizaciones no lucrativas
Contabilidad
Nonprofit organizations
Accounting
Rethinking Liquidity in Nonprofit Organizations: The Dual Role of Excess Cash in Explaining Financial Vulnerability
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Financial Accountability & Management
THUMBNAIL
Elvira-fam_2026.pdf.jpg
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Elvira-fam_2026.pdf
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10259/11579
oai:riubu.ubu.es:10259/11579
2026-05-06 02:05:36.945
Repositorio Institucional de la Universidad de Burgos
bubrep@ubu.es
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