We investigate corporate liquidity (cash holdings) in 15 European Union (EU) countries and 31 non-EU countries from 1994 to 2004. Our findings are three-fold. First, the introduction of the euro and the establishment of the Economic and Monetary Union (EMU) have reduced corporate liquidity in EU. Second, cash and debt are more substitutable in EU than non-EU countries in the transition to the monetary union. Lastly, corporate governance variables such as closely held shares, anti-director rights and creditor rights are important determinants of corporate liquidity and should not be ignored in international corporate liquidity studies. EuroJournals Publishing, Inc. 2010.
