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By using fixed-effects panel regression, we model cash holdings for agribusiness firms during the 1970-2012 period. The results suggest that agribusiness firms manage cash in a manner consistent with the precautionary theory of caution management. Specifically, agribusiness firms hold cash to quickly execute growth opportunities and limit transaction costs of acquiring capital for growth. Furthermore, a subset of cash-rich agribusiness firms, which concentrates 78.5% of the aggregate cash and 49% of total revenues, is analyzed with a logit model. Results of cash-rich agribusiness deviate from predictions by the precautionary theory. This finding has potential implications for structural changes in this sector.


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