Accessibility navigation


Does firm-level political risk affect cash holdings?

Bin Hasan, S. ORCID: https://orcid.org/0009-0001-4827-1964, Alam, M. S., Paramati, S. R. and Islam, M. S. (2022) Does firm-level political risk affect cash holdings? Review of Quantitative Finance and Accounting, 59 (1). pp. 311-337. ISSN 1573-7179

[img]
Preview
Text - Accepted Version
· Please see our End User Agreement before downloading.

581kB

It is advisable to refer to the publisher's version if you intend to cite from this work. See Guidance on citing.

To link to this item DOI: 10.1007/s11156-022-01049-9

Abstract/Summary

We investigate whether firm-level political risk affects corporate cash holdings. Taking a sample of 5,424 US firms with 129,750 firm-quarter observations from 2002Q1 to 2021Q3, we find that cash holdings is higher for firms with greater exposure to firm-level political risk. The positive relationship between firm political risk and cash holdings is consistent for financial constraint and non-constraint firms, high and low growth firms, pro-cyclical and counter-cyclical and competitive industries. Further, our findings are consistent to alternative measures of firm-level political risk and cash holdings. In addition, our findings remain robust with different endogeneity tests: a natural experiment, an instrumental variable approach, and a propensity score matching. Overall, we present novel evidence on the determinants of corporate cash holdings.

Item Type:Article
Refereed:Yes
Divisions:No Reading authors. Back catalogue items
Henley Business School > ICMA Centre
ID Code:103435
Publisher:Springer

Downloads

Downloads per month over past year

University Staff: Request a correction | Centaur Editors: Update this record

Page navigation