In this paper, we analyze empirically the effects of excess cash holdings on marginal value of cash of firms listed on Korea Exchange from 1999 to 2011. First, we classify both excess cash firms and non-excess cash ones according to the method of Opler et al. (1999) and excess cash firms is classified into persistent excess cash firms and transitory excess cash ones as well. The former is firms with persistently excess cash more than two years, the latter is firms with temporarily excess cash for one year. The main results of this study can be summarized as follows. The determinants suggested by the tradeoff theory have main effects on cash holdings, but the determinants suggested by pecking order theory and agency theory have partial effects on cash holdings. Capital expenditure ratio, net working capital ratio, profitability ratio, cash flows from investment activities, cash flows from financing activities, financial deficits ratio,market-to-book ratio, leverage ratio, and firm size have significant negative or positive effects on cash holdings of firms. Persistent excess cash firms earn significantly lower marginal value of cash compared to transitory excess cash firms, and holding excess cash over extended periods results in decrease in marginal value of cash, and so a fall in stockholder value. That is, the marginal value of cash to stockholders is not only lower for firms with larger excess cash, but also is decreasing in value over time. This result provides additional evidence in support of higher agency costs to firms that hold excess cash for consecutive years. In conclusion, excess cash holdings of firms destroy stockholder value. This result suggests that the capital market penalizes firms that hold excess cash at the expense of stockholders, and are consistent with agency costs associated with persistence in excess cash holdings. Moreover, it is not necessarily the level of excess cash that induces agency problems, but more importantly,the length of time firms retain excess cash. This paper may have a few limitations because it may be an only early study about the effects of excess cash holdings on marginal value of cash of firms listed on Korea Exchange. Therefore,we think that it is necessary to expand sample firms and control variables, and use more elaborate analysis methods in the future studies.