Does firm-level political risk affect cash holdings?

Hasan, Shehub Bin, Alam, Md Samsul, Paramati, Sudharshan Reddy and Islam, Md Shahidul (2022) Does firm-level political risk affect cash holdings? Review of Quantitative Finance and Accounting. ISSN 0924-865X

[img] Text
RQFA-Manuscript-Firm-level political Risk and Cash Holdings.docx - Accepted Version
Restricted to Repository staff only

Download (106kB)
[img] Text
RQFA-Manuscript-Firm-level political Risk and Cash Holdings (2).pdf - Accepted Version
Restricted to Repository staff only until 2 March 2023.
Available under License Creative Commons Attribution.

Download (621kB)

Abstract

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
Uncontrolled Keywords: Firm-level political risk; cash holdings; financial constraints; business cycle
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HG Finance
Divisions: Faculty of Arts, Business & Applied Social Science > Suffolk Business School
Depositing User: Md shahidul Islam
Date Deposited: 26 Jan 2022 11:22
Last Modified: 07 Mar 2022 16:42
URI: https://oars.uos.ac.uk/id/eprint/2242

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year