Cr oss-sectional variation in corporate liquidity within a sample of large U.S. corporations suggests that there are material effects from product market competiti on. The empirical evidence is consistent with an oligopolistic model wherein liquid assets are employed both to signal commitment to retaliate against market en croachment and to enable firms to rapidly preempt new opportunities. As predicted, firms with high valuation and spending on intangibles, in certain strategic positions, hold large stocks of liquid assets.